The government has said it will legislate to enable the PPF to pay inflation increases – also known as indexation – up to 2.5 per cent on pre-97 compensation / assistance payments to PPF and FAS members.
This would apply to those members whose original schemes provided for mandatory indexation on pre-97 pensions. The move would broadly align pre-97 indexation rules with those already in place for post-97 pensions for PPF and FAS members.
Changing the rules on pre-97 increases could benefit more than a quarter of a million (256,000) PPF and FAS members. The PPF assesses that around 165,000 PPF and 91,000 current FAS members have some pre-97 benefits where their former schemes provided mandatory indexation.[1]
Kate Jones, PPF Chair, said: “We warmly welcome the government’s move to change pre-97 indexation rules for PPF and FAS members. We’ve long known the impact the absence of pre-97 increases has had on affected members. It’s been important for us to support positive outcomes for, and balance the interests of, our levy payers and members. We’re pleased that members’ voices have been heard, and the government has acted positively.”
Michelle Ostermann, PPF Chief Executive Officer, said: “This is the right time to make this change to enhance the inflation protection for our members. Twenty years on from the creation of the PPF, we’ve matured and now stand in a strong financial position. While risks do remain, we’re confident we can absorb this change without compromising the high security we provide for members’ benefits or impacting our plans to set a zero PPF levy next year.”
Sara Protheroe, PPF Chief Customer Officer, said: “I’d personally like to pay tribute to the member campaigners who’ve long advocated so powerfully for change. This positive move would make a meaningful difference to thousands of members’ lives. While implementing this change will be no small task, we’re fully committed to delivering this at the earliest opportunity if and when it becomes law.”
The PPF will continue to support the Department for Work and Pensions (DWP), and policy makers, as this change is considered through the remaining stages of the Pension Schemes Bill.
In parallel, a critical focus now for the PPF will be moving forward preparatory work to be able to implement this change as soon as possible after it becomes law. The PPF currently must apply increases to members’ payments in January each year. If the Bill becomes law next year (2026) as expected, the first opportunity to begin applying any changes to pre-97 indexation would then be January 2027. The final shape of any legislative change, as well as when the Bill becomes law, will influence the timescales for implementation.
The PPF will communicate this development to its members and keep them updated on progress over the coming months. When the Bill has become law, the PPF will be better placed to communicate directly with the members it expects will benefit from this change and to update further on its implementation plans.
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