What has the government announced?
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.
How will I know if I’m eligible?
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.
When can eligible members expect to receive indexation?
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.
Will you use the discretion to raise the 2.5% cap on indexation
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.
What happens if I die before you start making these payments?
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.
How can I stay up to date on progress?
We’ll share updates on this page, our PPF member website, FAS member website and ppf.co.uk 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.