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.”