The Pensions Action Group (PAG) has expressed its frustration at the dismissal of an amendment to the Pension Schemes Bill (PSB) that would have compensated older members of the Financial Assistance Scheme (FAS).

Amendment 154 was proposed by House of Lords member, Baroness Ros Altmann, and would have given an undefined one-off lump sum to retrospectively compensate FAS members affected by the lack of indexation relating to pre-1997 pensionable service.

In the 2025 Autumn Budget, the government confirmed plans to index for inflation on pensions accrued before 1997 in the FAS and Pension Protection Fund (PPF), up to 2.5 per cent a year, from January 2027, which were broadly backed by MPs.

However, the PAG argued that most of the original beneficiaries had lost thousands of pounds since the inception of the FAS in 2004.

It noted that many Labour peers had supported Altmann’s amendment, which would have recognised the age, remaining life expectancy, and fragility of the worst affected, but it had been defeated at the report stage of the PSB due to the whip being applied.

The PSB has now returned to the House of Commons, and no further amendments can be considered, which the PAG said left affected pensioners and their spouses in “a very stressful situation”.

“The PAG are greatly angered as most of the Labour peers that voted down the amendment had not taken part in the debate and would not have known the background and desperate need for the amendment to be passed,” the group stated.

It highlighted that the one-off payment, or potential increase on an ongoing basis, may have produced an average of £400 a year.

PAG members also pointed out the PPF, which now administers the FAS, has reserves of over £14bn, which it said the government had stated cannot be used to assist.

“The PAG have written expressing their concerns to the Prime Minister, the Secretary of State and the Pensions Minister with no response, but the PAG will continue its campaign for fairness, justice and the need the government to accept its responsibility and to assure savers in pension schemes that they are protected should anything go wrong,” the PAG concluded.

Commenting in response, a government spokesperson said: “Our wider pension reforms will unlock billions of pounds for the UK economy, supporting businesses to grow and creating well-paid jobs across the country that put more money into people’s pockets.

“And thanks to our Pension Schemes Bill, someone on an average earner’s salary could see a boost of £29,000 to their pension by the time they retire, making pension pots work harder for savers.”

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