Introduction Background Note
11.The financial assistance scheme was established under section 286 of the Pensions Act 2004. The scheme provides assistance to members of certain defined benefit occupational pension schemes that are no longer able to meet all their pension obligations.
12.The scope of the financial assistance scheme has been expanded both through regulations and the Pensions Acts of 2007 and 2008. In the future the financial assistance scheme will take in the assets of the qualifying pension schemes. The scheme will then make assistance payments to members of those pension schemes in lieu of their retirement benefits.
13.As the financial assistance scheme is not a registered pension scheme, individuals who receive assistance payments from it will not necessarily benefit from the same tax treatment as if the payments were made by such a scheme. Tax charges may apply to some assistance payments received by individuals, such as certain lump sum payments, which would not arise if the payment were made by the original registered pension scheme. Regulations will be made to ensure that individuals who receive assistance payments from the financial assistance scheme will be subject to the same tax treatment as if they had received pension benefits from the pension scheme.