Government proposals to increase PPF payout to long-serving staff...

Enable Independent, IFA’s in Bishop’s Stortford are pleased to see that the Government is putting forward proposals to increase the pension payout to long-serving staff if their employer's business goes into liquidation.

Under current legislation the length of service is not taken into account if a person enters the PPF, Pension Protection Fund, the fund for members of a defined benefit scheme.

The PPF currently pays different types of levels, at the moment if someone is over the pension age who’s scheme employer goes bust they receive 100% of the money, uncapped, however if someone is under the pension age they are only entitled to 90% and the amount is capped to £31,380.

The Government plans to increase the maximum level for those receiving capped compensation to 3% for every year of service over 20 years. Under these new plans someone who would have contributed into a pension pot for 40 years would have accrued a pension of £50,000, and they would receive £45,000 rather than the £31,380 if there is insufficient funds to pay out.

Pensions minister Steve Webb stated: “People whose employer becomes insolvent can already get compensation when they retire through the PPF. But the scheme does not recognise the long service of those who were members of their pension scheme for over 20 years.

“It cannot be right that someone who has been with a company for much of their working life – and relies heavily on that for their pension income – gets the same in compensation as someone with far shorter service and who could also have other pension income to fall back on.

“I want to ensure that those who are or could be affected will in future have their long service recognised in the form of higher compensation.”

If you are currently paying into a pension scheme and would like some independent advice, why not contact your local IFA.


Issued by: Enable Independent Financial Life Planners
 25c North Street, Bishops Stortford, Herts CM23 2LD
Telephone: 01279 755950 - Fax: 01279 657339
Enable Independent Financial Life Planners is a trading style of Enable Independent Limited is authorised and regulated by the Financial Conduct Authority.
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