Tag pension protection fund

The Pension Protection Fund (PPF) is a UK-based organization that provides a safety net for people whose pension schemes have become insolvent. Here are some key facts about the PPF:

What is the Pension Protection Fund?

The PPF is a non-profit organization that was established in 2005 to provide a financial safety net for people whose pension schemes have become insolvent. The PPF is funded by a levy on eligible pension schemes.

How does the PPF work?

When a pension scheme becomes insolvent, the PPF steps in to provide a minimum level of compensation to members. The PPF's compensation is based on the amount of money in the pension scheme at the time it became insolvent, as well as the member's age and the amount of their pension entitlement.

What is the PPF's compensation level?

The PPF's standard compensation level is 90% of the amount of money in the pension scheme at the time it became insolvent, up to a maximum of £38,505 per year (2022/23 rates). This means that if a pension scheme has £100,000 in it, the PPF would pay out £90,000 to members, up to a maximum of £38,505 per year.

What is the PPF's priority scheme?

The PPF has a priority scheme for members who are within 12 months of their normal retirement date (NRD) when the pension scheme becomes insolvent. These members are entitled to receive 100% of their pension entitlement, up to a maximum of £38,505 per year.

How does the PPF pay out compensation?

The PPF pays out compensation to members in the form of a pension or a lump sum. The PPF also offers a range of options for members to receive their compensation, including a guaranteed income for life or a one-off lump sum payment.

What is the PPF's role in pension scheme wind-ups?

The PPF plays a key role in pension scheme wind-ups, which occur when a pension scheme is closed to new members and existing members are transferred to a new scheme or receive a cash payment. The PPF ensures that members receive a minimum level of compensation in the event that the pension scheme becomes insolvent.

How is the PPF funded?

The PPF is funded by a levy on eligible pension schemes. The levy is calculated based on the scheme's size and the level of risk it poses to the PPF. The PPF also receives contributions from the UK government.

What is the PPF's role in pension scheme regulation?

The PPF works closely with the UK's pension regulator, the Pensions Regulator, to ensure that pension schemes are properly funded and managed. The PPF also provides guidance and support to pension schemes to help them avoid insolvency.

Overall, the Pension Protection Fund plays a critical role in providing a safety net for people whose pension schemes have become insolvent. Its compensation scheme helps to ensure that members receive a minimum level of protection, even in the event of a pension scheme failure.