Members 'losing out' from further delay in PPF cap increase

The former pensions minister criticised the decision by the Department for Work and Pensions (DWP) not to increase the PPF compensation cap which adversely effects a minority of members.

In 2014, Parliament passed legislation to increase the capped PPF payouts for long-serving staff who had been with their respective firm for more than 20 years.

The DWP had been due to lay down the regulations this week but this has not happened. Expected changes to the PPF cap have been delayed before and were held up in March this year.

As things stand, pensioners over age 65 receive compensation at the 100% level, while most members below that age receive 80-90% of their expected pension.

For someone who takes their pension at age 65, the cap is £37,420.42 for 2016, and the person would receive 90% of that level which is £33,678 a year.

If they start receiving their pension at age 60, the cap falls to £32,376.75 a year and the 90% level they would be paid is £29,049 a year.

But some pensioners lose far more, even most of their pension under PPF rules because their payments are capped.

At age 55, the cap falls to £28,414.42 and the 90% level they would be paid is £25,573 a year.

Altmann (pictured above) said it was "so disappointing" the DWP has failed to act when "all the necessary work has been completed".

She said there was no justification for further delays to the regulations and called for them to be laid down immediately before parliament rises for the summer.

"The PPF cap could result in long-serving staff losing most of their
promised pension," she said. "Many people who had worked for their company for many years and who had managed to accrue higher pensions have ended up losing the majority of their payments. By contrast, other members receive closer to 90% of their promised pension."

She added: "I promised these members and their MPs that we would introduce the regulations as soon as possible. They are ready now, so they should be introduced immediately."

The issue is connected to the plans to save the British Steel Pension Scheme (BSPS). In a consultation on the scheme that ended on June 23 a major issue raised was the severe reductions in pensions for longer serving steelworkers by going into the PPF.

"Increasing the PPF cap could reassure many steelworkers that the PPF will pay more of their expected pensions," Altmann said.A DWP spokesperson said: "The PPF long service cap will give additional support to someone who's compensation has been capped and was a member of a pension scheme for over 20 years. We've committed to bringing this change in and will be legislating as soon as possible."

Atlmann has been replaced as pensions minister by MP Richard Harrington.

 

• Tweet  
• Facebook  
• LinkedIn  
• Send to  

• Topics
• Law and Regulation
• Industry
• Ros Altmann
• DWP
• PPF
• British Steel Pension Scheme
• Tata Steel UK
• Benefits
• Pensions Act 2014