The impressive £8bn figure is  the old trick of using cash terms rather than net present value. The £8bn is in cash terms inflated over 60 years. In net present value (today's money) it is £1.9bn, about half of what the government said is actually needed for full compensation in their response to the Ombudsman’s report (£2.9 - £3.7bn). To pay PPF level to everyone, as John Hutton’s briefing on 21st March '07  shows, would cost £2.5bn. To put this additional £0.6bn in context DWP officials overpaid benefits to people not entitled to them last year to the value of £0.7bn  i.e. in just one year, official errors in our benefit system cost taxpayers more than the 60 year extra cost of an acceptable solution to the problem.

When the Treasury quotes money figures look carefully at what is said as they use cash value to make things look large (NHS spending, FAS etc) and net present value when they want to make things look small (Trident, civil service pensions etc).

Rather than running the FAS like the PPF (i e as an on-going pension fund) the FAS money is being used to purchase the currently very expensive annuities and thus much of the taxpayer’s money is going as profit to the insurance companies.

What should have been done was to ring fence the funds from the failed schemes and let the existing PPF run it as an ongoing pension fund which would only take about £100M a year over 60 years. This figure would be actually be lower than that of course if you take off the tax which would be paid and the pension credit payments avoided. They would also save by sacking the FAS civil servants who had no previous experience of pension schemes. There’s also no need to use entirely tax-payers money – they could, as suggested by Frank Field,  be using a contribution from the orphaned assets which Gordon Brown wants to use for unspecified youth projects.

However in his budget speech the Chancellor did add that Hutton "will investigate, in full, the assets within the affected schemes and how we can use them further to support affected pensions". 

The OPA policy is that the victims in the FAS should receive at least the benefits of the PPF.

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The Chancellor in his last budget announced and increase for the FAS from £2.3 to £8bn.

FAS campaigner, Ros Altmann, says: "This is just not good enough

- It still only pays from age 65, but those who should have retired at age 60 lose 5 whole years of pension

- It still excludes solvent employer scheme members

- It still pays no inflation linking

- No tax free lump sum

- Widows benefits far less than scheme benefits

- 80% of core pension is not 80% of expected pension - it is worth around 60%

Wouldn't it have been great if Gordon Brown had used this - his last budget, to rectify this dreadful injustice, instead of prolonging it!

Sadly, the fight goes on, the Government has had four guilty verdicts, the Court of Appeal will deliver another one.  Meanwhile those affected are still suffering."

Pensions Theft Action Group