Will my pension increase?

Financial assistance will be reviewed each year and some elements may be increased in line with inflation to a maximum of 2.5 per cent. 

The Board of the PPF don’t have any powers to change indexation levels for the FAS.

How we calculate your increase will differ depending on the type of FAS member you are. If you want to find out more, contact us on 0330 678 0000 or +44 (0)20 8406 2121 if you are overseas.

 

Increases are applied each year on 1 January and these have been: 

 

Year	Increase (p/a)	Year	Increase (p/a)
2006	2.5%	2015	1.5%
2007	2.5%	2016	0.1%
2008	2.5%	2017	0.3%
2009	2.5%	2018	2.5%
2010	0.0%	2019	2.4%
2011	2.5%	2020	2.0%
2012	2.5%	2021	0.5%
2013	2.5%	2022	2.1%
2014	2.5%	2023	2.5%

The levels of compensation we pay are set in legislation

Changes to our PPF compensation levels are primarily a matter for Government. 

In particular, the legislation defines the extent of any annual increases to compensation when it’s being paid, also known as indexation. No indexation is paid on compensation related to service accrued before 1997 (‘pre-97 indexation’). The Board of the PPF don’t have any powers to change indexation levels for pre-1997 service, nor for members of the Financial Assistance Scheme.

Legislation does, however, provide our Board with the discretion to change one aspect of our PPF compensation: the level of indexation paid on compensation related to service accrued after 1997 (‘post-97 indexation’). Post-97 indexation is currently set in legislation to be the lower of 2.5% or the annual increase in prices as specified by the Secretary of State.

We understand that a key purpose behind the discretion granted to our Board to alter post-97 indexation was to help reduce the PPF’s liabilities in the event of a funding crisis, as the power can be used to reduce post-97 indexation down to zero. However, given the current high level of inflation, we’re aware that our members will see the value of their compensation dropping in real terms. The extent of impacts will vary according to individual circumstances and whilst we don’t hold the data to assess the impact on members’ living standards, we know that some members will be struggling with the cost of living. Our Board regularly considers whether to use this power to increase post-97 indexation levels. 

The Board’s consideration included:

• The impact of inflation and increased cost of living on our members. 
• The extent to which an increase to post-97 indexation levels could effectively address these impacts, noting that the Board’s power is limited to post-97 indexation, and only PPF members, not FAS members. 
• The long-term funding implications associated with any increase to post-97 indexation including where the impact of the cost would fall. 
• The wider impact. Because other rules are linked to our PPF compensation levels, an increase to post-97 indexation could have knock on implications for ongoing pension schemes and those which don’t come to us following insolvency. 
• The purpose of PPF compensation. We are intended to act as a safety net, so our PPF indexation is set broadly in line with the minimum legal requirements for schemes, thus making sure we do not pay more than the pension scheme would have done.
• The Government’s position. Our Board noted statements by Government that it was not considering any change to PPF levels of compensation in response to high inflation levels.

In 2022, our Board concluded that, on balance, it would not change levels of post-97 indexation at this time, though recognised the importance of keeping this position under review including if there are any material changes to the above factors.