The Pension Protection Fund—compensation

The following Pensions practice note provides comprehensive and up to date legal information covering:

  • The Pension Protection Fund—compensation
  • When is PPF compensation payable?
  • What are the PPF compensation levels?
  • 100% compensation level
  • 90% compensation level
  • Disapplication of the compensation cap
  • Unlawfulness of the compensation cap
  • Implementing the judgments
  • How did the compensation cap work before its disapplication?
  • What if the member is entitled to benefits from more than one source?
  • More...

The Pension Protection Fund—compensation

CORONAVIRUS (COVID-19) UPDATE: As a result of coronavirus, the PPF decided to make certain changes to its policies. For instance, the PPF will accept e-signatures and other forms of confirmation for PPF-specific documents (eg officer’s certificates), but will not accept paper s120 notifications.
The PPF has also introduced levy measures which will help schemes and employers through the coronavirus pandemic.
For more information, see Practice Note: Coronavirus (COVID-19)—the pensions implications for trustees—The PPF’s position.

When is PPF compensation payable?

Where the Pension Protection Fund (PPF) assumes responsibility for a scheme, it must pay compensation (ie benefits) to scheme beneficiaries in line with statutory PPF compensation levels.

Even before PPF assumes responsibility for the scheme, scheme benefits will be subject to PPF compensation levels. This is because, during the assessment period, trustees are required to pay benefits to members in accordance with the scheme's 'admissible rules' but reduced to PPF compensation levels where necessary.

If incorrect payments are made to members by the scheme during the assessment period (eg exceeding PPF compensation levels), the PPF can take such steps as it considers appropriate to recover the amount of the excess plus interest, including by adjusting members' future compensation payments.

For information on assessment periods, see Practice Note: The Pension Protection Fund—assessment periods and operation of schemes.

For information on a scheme's admissible rules, see Practice

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