Your questions answered on pre-97 indexation

The current law, which has been in place the last 20 years, says we can’t pay inflation increases on pre-97 compensation (for PPF members) or assistance (for FAS members) that is in payment. The government announced that it wants to change the law on pre-97 indexation to enable us to pay pre-97 increases.

It has introduced provisions in the Pension Schemes Bill to do this. The current draft of the Bill sets out that these inflation-linked increases will be capped at 2.5 per cent per year and will apply to members whose schemes promised them as a right. They will also only be paid going forward (prospectively).

Before it becomes law, the Bill must be agreed by MPs and Peers.  

Once the Bill becomes law we’ll be better placed to confirm who will be eligible.

At the moment, only the members whose schemes provided mandatory or statutory inflation increases on pre-97 pensions will be eligible.

You don’t need to contact us, we’ll contact eligible members directly in due course.  

The final shape of the legislative change, as well as when the Bill becomes law, will influence the timescales for implementation.

Assuming the Bill becomes law this year, the earliest opportunity for us to start paying pre-97 increases will be in January 2027. Currently we must apply increases in January each year – we have no discretion to pay increases out of this cycle.

 However, we’ll be in a better position to know when we can deliver this, when the Bill becomes law.

This is a complex change, but we’re working as quickly as possible and will do everything in our power to deliver it at the first available opportunity. We’re already working hard to get ready.  

The Board of the PPF currently has a discretion that allows it to alter the rate of post-97 indexation. The Bill currently looks to extend this discretion to pre-97 indexation too. If this becomes law, the PPF Board will then consider its approach for operating this discretion going forward and the factors to be considered.

We expect that the legislation enabling increases to members of schemes which provided pre-97 indexation as a right will allow the first payments to be made at the earliest from January 2027.

We’re working closely with the Department for Work and Pensions on the detail of the legislation and will provide further information when we’re able.  

We’ll share updates on this page, our PPF member website and our FAS member website so that you can stay fully informed of developments.

When the Bill has become law, we’ll be better placed to communicate directly with the members we expect will benefit from this change and to update further on our implementation plans.

You don’t need to contact us, we’ll contact you in due course.  

We estimate that changing these rules will benefit at least a quarter of a million (c.250,000) members. This includes 165,000 PPF members and 91,000 FAS members who were members of schemes that provided pre-97 increases as a right. Members whose schemes did not provide mandatory indexation but did provide indexation on post-88 Guaranteed Minimum Pensions (GMPs) will also benefit. 

In September 2025, we published a letter to the Work and Pensions Select Committee (WPSC), that set out our latest estimates of the cost impacts of changes to pre-97 indexation.

We estimated that, as of 31 March 2025, the cost of introducing pre-97 indexation (capped at 2.5 per cent) for members of PPF and FAS schemes that provided for mandatory and statutory pre-97 indexation, on a prospective basis, would be £1.2bn for PPF and c.£300-600m for FAS.

We expect to be last man standing in the Defined Benefit (DB) universe and paying members into the next century – so we need to have confidence that we have the reserves to withstand a volatile global environment and evolution in the DB market over a very long period of time.

While this change will impact our funding position, and have broader impacts for wider scheme funding levels, we assess that we can enhance the inflation protection we give members without compromising the security of their or future members’ benefits.  

We do not expect this will impact our levy plans.

In November 2025, we launched our consultation on our plans for the 2026/27 levy. In it we set out our intent to set a zero levy for 2026/27 for conventional schemes dependent on the passage of the levy measures in the Pension Schemes Bill. We'll announce the outcome of this consultation by the end of March 2026 at the latest, if not earlier.