More than 66,000 retirees will have to wait an extra year for increases to their pension payments, as the Pension Protection Fund (PPF) cannot meet the original deadline.
The delay affects people relying on the PPF and the Financial Assistance Scheme (FAS), government-backed organisations that step in if a company goes bust or cannot pay pensions. They protect savers with defined benefit schemes, which provide a guaranteed income for life.
What was promised
Over 330,000 retirees were told their payouts would rise with inflation by as early as January 2027. However, 66,000 people have been informed they must wait until at least 2028, according to the Telegraph.
Pensions from schemes that went bust between January 1997 and April 2005 are covered by the FAS, while those after are covered by the PPF.
Changes announced
Ex-Chancellor Rachel Reeves announced in her final Budget last November that increases for pre-1997 funds would be introduced, capped at 2.5% annually. The move was set to boost 265,000 pensions from January 2027.
However, another 66,000 of those affected were only entitled to inflationary increases on their Guaranteed Minimum Pension (GMP), a minimum pension for those contracted out of the additional state pension between 1978 and 1997. These also increase with inflation, capped at 3% a year, but this does not apply if the pension is provided through the PPF and FAS. This is due to change from January 2028.
PPF response
A PPF spokesman told the Telegraph: “Our priority is to implement payments from January 2027 for around 265,000 members whose schemes provided wider pre-1997 increases. This approach gives us the greatest confidence of delivering those payments accurately and on time.
“We will then complete the additional work required for around 66,000 members whose schemes provided increases only on post-1988 GMP benefits, with payments expected from January 2028.
“While we appreciate this will be disappointing for those members, we believe this phased approach is the most effective way to deliver these important changes successfully for everyone affected.”
A government spokesman added: “We are making the biggest change to pension compensation in over 20 years, benefiting over 250,000 PPF and FAS members. The vast majority of eligible members will receive these increases from January 2027, the earliest possible date.”
