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Govt reviewing Pension Protection Fund compensation cap

Steve Webb 480 LibDems DWP

The Government is reviewing the structure of the Pension Protection Fund compensation cap to reflect how long an employee has worked for a company.

The PPF is a lifeboat fund for members of defined-benefit pension schemes whose sponsoring employer has gone bust.

Currently if an individual’s employer fails before they reached retirement age, they will receive compensation worth 90 per cent of the value of their pension at the time. This figure is capped at £34,049.84 per year.

A Department for Work and Pensions spokesman says: “We are reviewing the structure of the Pension Protection Fund compensation cap, in particular the feasibility and cost of reflecting length of service when calculating the cap to apply to individuals.”


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There are 2 comments at the moment, we would love to hear your opinion too.

  1. Sounds reasonable. Why should an employee that enjoys accelerated accrual and high superannuable pay benefit to the same extent as employees of long service.

    Although to be fair as long as the taxpayer is not acting as a long stop, I don’t really care that fully funded DB schemes are subsidising the backsliders, more fool them. Personally I don’t think that employees really even now appreciate the costs involved. I hear talk of 30% of salary as a contribution to match maintain DB benefits. I wouldn’t be surprised if it’s more like 50% and that’s for Career average.

  2. Not to worry, just add an additional levy to IFA’s as always happy to pick up the bills for others mistakes and losses

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