Next group of members receiving increased payments

We’ve started to make increased payments to pensioners whose benefits fell below 50% of the value of their accrued benefits because of a combination of the compensation cap and other factors. We’re aiming to increase payments to the majority of pensioners in this group by the end of September 2020.

We’re already making increased payments to all pensioners affected because of the cap alone and who’ve sent us the information we asked for.

‘Other factors’ bringing compensation below the threshold

Other factors might be:

If the annual increases a member would have received under their former scheme would have been significantly more than the annual increases which apply under the PPF
Differences between their former scheme’s benefit structure and the PPF’s benefit structure, eg spouse’s benefits

What we’re doing next

We’ll continue to process the increases to affected members in this category.

We’re also continuing to gather data for the members who weren’t capped, but are affected because of other factors. We think we’ve got enough information to begin assessing and calculating increases for these members, but it will take some time before we can process all the necessary increases.

We hope to increase payments for 90 per cent of everyone entitled to an increase by the end of March 2021.

What you need to do if you think you’re affected

If we’ve written to you asking for information, please send us whatever you can, or let us know you haven’t got what we’ve asked for. If we don’t hear from you, we can’t process any increase you might be due.

If we’ve written to you and asked you to send a form back to us, but you need us to send you the form again, please let us know.

If you can’t remember if we’ve written to you, you can find out by checking your account on our member website. You don’t need to do anything if we’ve not written to you.

Paying arrears of regular monthly payments and tax free lump sums

Although we’ll continue to process these increases, we won’t yet pay any arrears (including tax free lump sums). This is because there are ongoing UK court proceedings about the way we’re calculating increases.

If the court decides we must take a different approach, we may have overpaid your increase and we might have to recover overpayments.

However, if it’s a year since we sent you your new calculation, and you retired and/or your scheme transferred to the PPF after 5 September 2012, we’ve decided that we’ll pay your tax free lump sum although the court hearing hasn’t yet taken place.

This is to make sure there are no adverse tax consequences for you. We still won’t yet pay your arrears of compensation.

If, once we’ve paid you this lump sum, the court later decides that we must take a different approach, we’ll contact you at that point to discuss next steps. If we’ve paid you too much, we’re likely to have to recover the overpayment from your unpaid arrears and future monthly payments.

If you retired and your scheme transferred to the PPF before 6 September 2012, we still won’t yet pay you your lump sum even if we gave you your new calculation a year ago. This is because you may be affected by ‘limitation’.

This is the question of whether there should be a time limit on the arrears we pay, so that we don’t pay arrears due before 6 September 2012 (including your lump sum). It will be considered in the court case. We’ll discuss any tax implications with you once we know the result of the case.

The court hearing is due to take place in the week beginning 11 May. We don’t know when we’ll receive the judgment.