Increase to PPF cap … eventually

21st April 2017

We reported back in 2013 ( see /news/ppf-compensation-cap) about proposals to increase the cap that applies to benefits payable by the Pension Protection Fund (PPF).  We are delighted to announce now that these proposals have finally been implemented this month.

Background

Compensation paid by the PPF is subject to a cap (currently £34,655 per annum) for scheme members who are below normal pension age at the date their scheme enters the PPF.

The cap was introduced in order to protect the PPF against senior executives awarding themselves large pensions and then triggering insolvency: the cap would operate to remove the benefit in them doing this.  However, it also affects ordinary, long-serving members who have built up a higher pension through a long career with one company.

To address this issue, the Government announced an increase of 3% in the cap for each year of service in excess of 20 (up to a maximum of twice the standard cap), so that the effect on such long-serving employees is reduced.

That was four years ago – and they say that a week is a long time in politics!