The Pension Schemes Act has become law

 

The Pension Schemes Act (‘the Act’), which includes several measures relating to the Pension Protection Fund (PPF) and Financial Assistance Scheme (FAS), has officially become law.  

The measures in the Act will strengthen the compensation that many PPF and FAS members receive and reduce costs for levy payers. 

They will also support us in continuing to improve the service we offer our members and the schemes we protect and enhance options for overfunded schemes - also known as PPF+ cases - in our assessment process. 

Our focus is on implementing the measures set out in the Act, with lots of this work having already started. 

Measures in the Act mean we can pay future inflation increases of up to 2.5% on pension payments built up before 1997, where the original scheme included inflation protection.

We’ve assessed that this could benefit more than a quarter of a million (256,000) PPF and FAS members.

We intend to start writing out to members impacted by this change in the summer. 

Find out more about the changes to pre-97 indexation.

Measures in the Act give us greater flexibility to set the PPF levy - including the ability to reduce it to zero, while still allowing us to increase it again in future if needed. 

The Act has also removed the requirement for defined benefit pension schemes to pay the PPF administration levy.

These changes lower costs and reduce the amount of information sponsoring employers need to provide, while allowing us to maintain our financial security.

Accessing PPF and FAS details through pension dashboards 

The Act has allowed us to take the first step in enabling our members to have access to their PPF and FAS data via Pensions Dashboards, including the MoneyHelper Pension Dashboard, which will create better financial transparency and management.

However, further regulations are needed before we’ll be able to connect with the dashboards. 

The Act has changed the definition of terminal illness to twelve months’ life expectancy, instead of six months, in line with DWP’s social security payment definitions. 

This allows us to pay lump sum payments earlier for terminally ill PPF and FAS members. 

More options for better-funded pension schemes 

Measures in the Act also help create more options for PPF+ cases. 

This means some schemes with more funding may be able to leave the PPF assessment process and secure an alternative arrangement, rather than entering the PPF. 

We’re now firmly focused on implementing the measures set out in the Act – with lots of this work having already started.

We’ll continue to work with DWP as they develop, where needed, additional legal detail, and will ensure our members and others who are impacted are kept fully updated on progress.