FAQs on Retirement

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Yes. As long as you are not already receiving part of your entitlement, you can put off receiving payments up until the age of 75. You will need to let us know what date you would like your compensation payments to start.

Yes, you can change your mind about deferring your compensation and ask to take your payments earlier, or later, than planned.

Further information is available in the 'When you retire' booklet.

You have to be 55 years old or over to retire early - unless you have the right to take your pension earlier under the rules of your former pension scheme (known as protected pension age).

If you want to receive your compensation early, you should contact us to ask for an early retirement quote. We will then confirm if you are eligible to receive early payments and you can then decide whether to apply or not.

Further information is available in the 'When you retire' booklet.

If you were below your Normal Pension Age when your former scheme entered the PPF assessment period then, when you retire, you will receive compensation based on 90 per cent of what your pension was worth at the time your employer became insolvent. 

Parts of your compensation may be payable at different ages, depending on your entitlement under your former scheme.

The total amount of compensation you can receive from us each year is capped at a certain level (known as the compensation cap), although the vast majority of members are not affected by this cap.

If your payments have been capped, this will be shown on your ‘Illustration and Retirement Options’ form.

We’ll contact you closer to when you are due to retire to let know what your options are for receiving payments.

Your compensation will increase each year until you reach your Normal Pension Age (or Early Retirement Date if you retire early), and the increase will be in line with inflation, up to a limit set by government. But if inflation falls below zero, your compensation will not change.

If you decide to put off taking your compensation beyond your normal pension age, then your compensation will be increased using actuarial factors.

There are limits to the increases you’re entitled to as a deferred member. For compensation that’s derived from pensionable service before 6 April 2009, the amount of revaluation is capped at 5 per cent per year compound. The amount of revaluation for compensation related to service on and after that date won’t exceed 2.5 per cent per year compound.

Until recently the amount of PPF compensation we paid most of our members was capped at a certain level. This level was known as the PPF compensation cap.

In May 2020 the Administrative Court heard a challenge brought against us by a number of members to the lawfulness of the PPF compensation cap.

A recent ruling found that the PPF compensation cap was unlawful on grounds of age discrimination.

This means that we will no longer restrict member’s compensation to the cap.

If you’re compensation has been capped or was going to be capped please read our comprehensive FAQs to find out how this will affect you. If you’ve any further questions please don’t hesitate to contact us.

We will pay your compensation directly into your bank account.

How we increase your compensation, is set by law. Any part of your compensation derived from pensionable service before 6 April 1997 won’t increase in payment.

But any part of your compensation derived from pensionable service on or after 6 April 1997 may increase annually. Increases to compensation payments are applied on 1 January each year. As we no longer issue paper payslips, you won’t now be notified in advance of any increase you may be entitled to. But all your payslips are available to view online.

The annual increase is set in line with the change in the Consumer Prices Index (CPI) up to a maximum of 2.5 per cent.

You’ll get a proportionate increase in your first year of retirement if you’ve been receiving compensation from us for less than 12 months.

If you're a dependant you'll receive annual increases if the original member received increases on their compensation, and then the annual increase is based on the date the compensation came into payment. This will be a date during the member’s lifetime if they were already retired. If they passed away before retiring, this will be the date you started receiving the compensation as a dependant.

Yes, you will receive a reduced amount if you take your compensation early. This is because, by choosing to take your compensation early, we will need to pay your compensation over a longer period of time.

We will get in touch with you at least six months before your normal pension age (NPA), or selected pension age if you opted to defer, about your options for receiving compensation payments.

Or if you want to receive your compensation early, you should contact us to ask for an early retirement quote. We will  confirm if you are eligible to receive early payments and you can then decide whether to apply or not. Generally speaking, you must be at least 55 years of age in order to take early retirement.



Yes, if you’re a deferred member of a scheme that provided revaluation (which will be the case for most of our members).

The PPF can pay compensation at different ages to members with multiple Normal Pension Ages (NPAs). You might have different NPAs for different periods of service. Each period of service with a different NPA is referred to as a “tranche” and may be put into payment at the same time or separately.

Please see our 'when you retire' booklet for further details multiple NPAs.

A relevant partner is someone of either sex who you aren’t married to, or in a civil partnership with, but who you live with as if you are married or in a civil partnership.

A relevant partner is entitled to compensation as your dependant only if there was a provision in your former pension scheme rules to provide for a relevant partner.

You can defer your compensation up until the age of 75.

Approximately three months before your retirement date, you will receive an Illustration and Retirement Options form which sets out the range of options available to you. You can choose which option best suits you by returning the form to us.

For monthly compensation, we'll pay you in advance and generally on the first day of the month.

Lump sums entitlements will be processed via BACS on the day of your retirement, and it could take up to 5 working days from then for the money to be received into your bank account.

Your payments will be treated as earned income and taxed accordingly. We will send you a P60 at the end of each tax year to show you the total amount of payments you have received and the amount of tax deducted. Please keep your P60 safe so you can refer to it if you need to complete an income tax return.

Yes, in most cases you can take up to 25 per cent of the value of your compensation as a tax free lump sum when you decide to retire.

Yes, your compensation will be increased to reflect that you will be receiving your benefits at a later date.

You might want to start receiving your payments later than your normal pension age.

You can ask us to defer payment of your Compensation at any time by writing to us at:

Pension Protection Fund
PO Box 254
WYMONDHAM
NR18 8DN

Please include the following with your request:

  • Your name, address, date of birth and National Insurance Number
  • The name of your former pension scheme
  • The date on which you would like your compensation payments to start

The option to defer will also be included in your Illustration and Retirement options form that we automatically send you approximately six months before you reach your normal retirement age.

Your payments will then be increased to take into account the fact that they are being paid later.

You will not be able to delay payments if you are already receiving part of your entitlement.

You might be able to receive your entire PPF compensation as a lump sum, known as a ‘trivial lump sum’. To do this, you’ll need to make sure that you meet the following conditions:

  • You must be aged between 55 (or earlier if you have a "protected" pension age) and 75.
  • The value of all of your pension benefits (from other pension schemes as well as the PPF) must be less than £30,000.
  • And, if you wish to take a trivial lump sum from the PPF or other pension schemes, you'll need to take all of them within a 12 month period.

If you are eligible to receive your compensation as a one-off trivial commutation lump sum, 25 per cent would be payable tax free.

We are unable to pay your PPF Compensation/ FAS Assistance to a Post Office Account (POCA) as this account will not accept these credits as they are for Government payments only.

The sort codes for these accounts are: 60-94-63, 60-94-64, 60-94-67, 60-94-68 and 60-95-24.

We will only send you a paper payslip in the event that your upcoming monthly payment changes by more than £5 from the previous month.

However, if you register on our member website you'll be able to view all your payslips online. Your payslip will look like the example below:

 

Many Defined Benefit (DB) schemes were 'contracted out' in the past. This meant that members of those pension schemes paid less in National Insurance contributions.

The effect of this was a reduction in their state pension. GMP is the minimum guaranteed level of pension, which a pension scheme had to provide to members if they were contracted out between 6 April 1978 and 5 April 1997 to make up for this reduction.

The calculation for GMP is taken care of before a scheme fully transfers to the PPF and so is already included in your PPF compensation.

If you've received a notification from Her Majesty’s Revenue and Customs (HMRC) regarding your Contracted Out Pension Equivalent (COPE) that lists your previous scheme which is now with the PPF, that amount is included in your compensation and it isn't an additional payment.

The amount quoted by HMRC maybe more than what we’re saying you’re entitled to. This is because PPF compensation payments aren’t measured against the original contracted-out deduction and don’t directly replace the contracted-out element of the scheme.

No, PPF legislation only allows us to increase payments relating to pensionable service from 6 April 1997. Payments relating to service accrued from this date may rise in line with inflation each year, subject to a maximum of 2.5 per cent a year. Payments relating to pensionable service before that date won’t increase.

As GMP relates to service prior to 6 April 1997, increases in payment do not apply, even if they would have done within your scheme.