On the go: The Pension Protection Fund is to begin topping up the benefits of members whose compensation has fallen below half of their original entitlement "as quickly as possible”, after a European court found its current payment structure unlawful.
The Court of Justice of the European Union ruled in September that the UK pensions lifeboat must ensure that all members are paid at least 50 per cent of what their employer promised them. Benefits can fall below this threshold due to the cap on PPF annual payouts, and because the PPF does not provide inflation protection for benefits accrued before 1997.
The fund has written in tranches to all those who might be affected by the ruling to confirm records and repair patchy data. Rather than wait for the CJEU ruling to be translated into UK law, it will begin taking remedial steps straight away in conjunction with the Department for Work and Pensions.
Values will be produced for both the benefits the member could have expected to receive from the scheme when it entered PPF assessment, and what they would receive under the PPF compensation structure.
The “headline level” of compensation will then be increased to at least 50 per cent of expected pension, with the PPF’s indexation rules continuing to apply. The lifeboat said it expected no further adjustments to be necessary after this top-up.
The same changes will apply to members of the Financial Assistance Scheme, which is paid for via taxation rather than levies on solvent schemes. Solvent schemes in the FAS will be excluded from the top-up.
