Consultation launched on PPF compensation regulations

06 July 2018

The consultation is seeking views on the Pension Protection Fund (Compensation) (Amendment) (No.2) Regulations 2018 and will close on 24 July 2018.

The Pension Protection Fund (PPF) provides compensation to members of defined benefit pension schemes where the sponsoring employer is insolvent. PPF aims to provide compensation that is based on the member’s total pension benefits within a scheme and this amount should be subject to an overall compensation cap where appropriate.

The High Court judgment in Mr Beaton v the Board of the PPF has resulted in legislation being interpreted in a way that was not the original policy intent of government in cases where a person has benefits derived from a fixed pension.

This consultation concerns changes to PPF compensation rules to remedy the immediate problems caused by the judgment and to ensure that the PPF has the legal basis to administer the compensation regime as intended.

The proposed regulations will seek to clarify that a relevant fixed pension is regarded as attributable pensionable service for the purpose of calculating PPF compensation, including the application of the PPF compensation cap where relevant.

The consultation asks two questions:

‘Question 1

Do the regulations as currently drafted achieve the policy intent as outlined in this consultation document?

Question 2

Are you aware of any potential unintended consequences for individuals or the PPF resulting from the proposed regulations?

Subject to sub-paragraph (5), “pensionable service” means— (a) actual service in any description of employment to which the scheme applies which qualifies the member for benefits under the scheme, and (b) any notional service allowed in respect of the member under the admissible rules which qualifies the member for such benefits.'

Consultation responses can be posted or emailed to [email protected].

Full details relating to the consultation are available on

Geographical extent: England, Scotland and Wales