The Department for Work and Pensions (DWP) is reported as looking at changes to payouts made by the Pension Protection Fund (PPF). Current rules mean not all savers in a pension rescued by the PPF have their income rise in line with inflation.
But The Sun has reported that pensions minister Torsten Bell is expected to update on plans to make sure all savers have their PPF pension payments rise in line inflation later this week. The Pension Protection Fund is a government-run scheme that takes over the pensions of companies that have gone bust, but it only applies inflation increases for the number of years worked after 1997.
This is because pensions in the PPF are final salary schemes. This means that pensions are calculated using the number of years someone has worked plus a percentage of their salary.
At the moment if someone worked before April 6, 1997 that part of their pension linked to their salary, would not rise with inflation.
In February the Work and Pensions Committee (WPC) wrote to Mr Bell asking him for an update on this issue known as the non-indexation of pre-1997 rights.
Pensions Age reported that the WPC has been urging the government legislate to improve Pension Protection Fund (PPF) compensation levels, after finding out the issue had a disproportionate impact on women and older people.
The WPC chair, Debbie Abrahams, said the move would cost an extra £1.7bn but that the PPF’s reserves has increased to £13bn.
She also stressed the need for a quick response from government, pointed to evidence from the WPC’s ongoing inquiry on pensioner poverty.
