Information on pre-97 indexation

The government has passed new legislation, the Pension Schemes Act 2026, that allows us to pay inflation increases – also known as indexation – on pension benefits accrued before April 1997, for PPF and FAS members. 

The Act states that indexation will be capped at 2.5 per cent per year and will apply to members whose schemes promised them as a right. They will be paid going forward (prospectively). 

Now that the Act is law, we are better placed to confirm who will be eligible.

We intend to start writing out to all eligible members in the summer.

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

The earliest opportunity for us to start paying pre-97 increases will be in January 2027. We must apply increases in January each year – we have no discretion to pay increases out of this cycle.

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. 

For members whose scheme rules required the payment of indexation on benefits relating to pre-1997 service: if you have an eligible beneficiary, they will be entitled to increases on the pre-97 proportion of their compensation.

For members whose schemes provided pre-1997 indexation only on post-1988 Guaranteed Minimum Pensions (GMPs): if you have an eligible beneficiary, they will be entitled to increases on the relevant proportion of the pre-97 element of their compensation.

We’ll continue to work with DWP as they develop the finer details of the changes and will provide more information when we’re able.  

The Act gives the Board of the PPF a discretion that allows it to alter the rate of pre-97 and post-97 indexation.

The Board reviews its discretion powers annually – no decisions have yet been taken for next year.

We know though that:

• We can’t use the new pre-97 discretion provision to cover the absence of past pre-97 increases.
• The clear purpose of the power, when it's in force, is in relation to future inflation levels.
• As a compensator, we need to approach very carefully any decision that could result in us paying more than original scheme benefits.  

If you're thinking of retiring soon, visit our PPF member website or FAS member website to find out more.

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.

We intend to start writing out to all eligible members in the summer.

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

We confirmed a zero levy for 2026/27 in February and published our levy rules and policy statement in March.