Pension Protection Fund

The Pension Protection Fund has been operating since April 2005 and effectively replaces the Financial Assistance Scheme. The Pension Protection Fund, as the name suggests, is intended to protect people who have invested in their employer’s pension scheme but will not be entitled to receive their pension as promised, perhaps because their employer has gone bankrupt or their pension scheme was under-funded.

If your pension savings scheme is eligible for protection from the Pension Protection Fund and you have reached the scheme’s pensionable age, the Pension Protection Fund may be able to pay you one hundred percent of the pension you were expected to receive. You may also receive one hundred percent of the value of your expected pension before the required pension age if you have retired on health grounds. If your partner has died and their scheme is covered by the Pension Protection Fund, you too may be entitled to receive their full pension. However there is a limit to how much you can receive from the Pension Protection Fund: this is currently set at £29,928.56.

If your pension savings scheme is eligible for protection from the Pension Protection Fund and you have retired but not reached the scheme’s pensionable age, the Pension Protection Fund may be able to pay you up to a maximum of ninety percent of the pension you were expected to receive. This would entitle you to a maximum of £26,935.70: ninety percent of the current limit.

If your pension savings scheme is eligible for protection from the Pension Protection Fund, the scheme will make mandatory annual payments to the Fund. Your pension scheme provider ought to be able to inform you whether your pension scheme is covered by the Fund. If you have any questions about the Pension Protection Fund, and how much compensation you are entitled to if your pension scheme is now insolvent, you are advised to discuss the matter with your pension scheme provider. They should be able to advise you on your best plan of action. You can contact the Pension Protection Fund directly on 0845 600 2541 if you do not receive the help you require.