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Compensation 


If you are already receiving compensation from the Pension Protection Fund and want information on your personal entitlements, please click here to go to our members' site, where you will find this information and frequently asked questions (FAQs).

The PPF pays different levels of compensation, depending on your circumstances:

 

If You Have Retired

You will have been receiving a pension from your scheme before your former employer went bust.

If you were beyond the scheme’s normal retirement age when your employer went bust, the Pension Protection Fund will generally pay 100 per cent level of compensation, which means we will generally pay you the same amount in compensation when your scheme enters the PPF.

Your payments relating to pensionable service from 5 April 1997 will then rise in line with inflation each year, subject to a maximum of 2.5 per cent a year. Payments relating to service before that date will not increase.

This information may also apply if you retired through ill-health or if you are receiving a pension in relation to someone who has died.

 


If You Retired Early

If you retired early and had not reached your scheme’s normal pension age when your employer went bust, then you will generally receive 90 per cent level of compensation based on what your pension was worth at the time. The annual compensation you will receive is capped at a certain level.

The cap at age 65 is, from 1 April 2014, £36,401.19  (this equates to £32,761.07 when the 90 per cent level is applied) per year. The earlier you retired, the lower the annual cap is set, to compensate for the longer time you will be receiving payments.

You can view a full list of the compensation caps for each age here.

Once compensation is being paid, then payments relating to pensionable service from 5 April 1997 will rise in line with inflation each year, subject to a maximum of 2.5 per cent.  Payments relating to service before that date will not increase.

 

 

If You Have Yet to Retire

When you reach your scheme's normal retirement age, we will pay you compensation based on the 90 per cent level subject to a cap, as described above.

Until you reach normal retirement age and your compensation is put in payment, your compensation entitlement will rise in line with inflation each year, subject to a cap. See our FAQ about revaluation of compensation while you are a deferred member.

From 30 April 2013, you may be able to take your compensation at a later age than your normal retirement age. If you defer taking your compensation, it will receive an actuarial adjustment to reflect the period it is postponed.

Once compensation is being paid, then payments relating to pensionable service from 5 April 1997 will rise in line with inflation each year, subject to a maximum of 2.5 per cent. Payments relating to service before that date will not increase.

 

If You Die

After your death, we will pay compensation to any children you may have who are under 18 years old, or under 23 if they are in full-time education or have a disability.

We will also generally pay compensation to any legal spouse, civil partner or other relevant partner. However, individual circumstances may differ depending on the rules of the fomer pension scheme.

Please read our leaflet on Compensation for Survivors & Children (this link will take you to our member site).

 

If You Are Divorced

A member’s compensation can be shared with their ex-spouse or former civil partner if the court makes a pension compensation sharing order. Please read our leaflet on Compensation and Divorce and information on the associated PPF Divorce Charges for more information. The charges for dealing with a Pension Sharing Order may be different, so you should contact the PPF for more details on these. 

 

Please note, levels of compensation can be altered by the Secretary of State on the advice of the PPF.