DWP to fix 'unintended' PPF rules in pension schemes bill
The government will change the law to allow the Pension Protection Fund (PPF) to aggregate pensions for the purposes of calculating compensation.
As part of the upcoming pension schemes bill, the PPF confirmed to PP that the Department for Work and Pensions (DWP) will legislate to allow the lifeboat fund to consider fixed transfer pensions as part of a main pension account.
The move is in response to a High Court judgment two years ago that said defined benefit (DB) entitlements which had been transferred into a new scheme had to be treated separately to the accumulated benefits in the main scheme.
This meant that members in this situation could receive two pension payouts from the PPF, both individually subject to their own compensation caps, rather than one aggregated calculation.
The government said the court's reading of the law was not how it had intended the lifeboat fund to operate, previously arguing: "An important principle of the PPF is that compensation should be based on the member's total pension benefits within a scheme, and that this should be subject to an overall compensation cap where appropriate."
It had already legislated to fix the regulations for members from 2 October 2018, but the DWP will now make the rules apply again, retrospectively, for benefits taken on by the PPF before that date.
The pension schemes bill will also introduce legislation for enhanced regulatory powers, collective defined contribution, and pension dashboards.
In a separate announcement, the DWP confirmed there would be further trials of dashboards next year. Work and pensions secretary Thérèse Coffey said the bill would make the UK "the best place in the world to retire".
"We are pushing ahead with our latest revolutionary reforms. With this legislation, we'll ensure reckless bosses are brought to book, transform the way people get information about their retirement savings and introduce a whole new pension to the market boosting returns for millions."
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