Draft Pension Protection Fund (Compensation) (Amendment) Regulations 2018: technical consultation
Download the full outcome
Detail of outcome
We published the government’s response to this consultation on 29 January 2018.
This document also responds to the consultation Pension Protection Fund: draft regulations to take account of bridging pensions.
Read the Pension Protection Fund (Compensation) (Amendment) Regulations 2018.
Original consultation
Consultation description
Bridging pensions allow members of defined benefit occupational pension schemes who retire before reaching State Pension age to be paid a higher rate of pension initially. The pension then reduces when the member receives their State Pension or from another date specified in their pension scheme rules (the decrease date).
Currently, pensioner members in receipt of a bridging pension at the higher rate when their scheme enters the Pension Protection Fund (PPF) receive PPF compensation based on this rate for life. Had the pension scheme not entered the PPF, the member’s scheme pension payments would have reduced at the decrease date.
Between 31 August and 1 October 2017 the government ran a consultation which sought views on its preferred approach to address the PPF bridging pensions anomaly by actuarially converting the bridging pension into a flat-rate lifetime equivalent amount (known as smoothing).The vast majority of those who responded to the consultation agreed that the government should legislate to correct the PPF bridging pension anomaly. However, a significant proportion of respondents expressed a preference for the alternative approach set out in the consultation, one based on the rules of the original scheme. After careful consideration of the responses, the government has decided to address the PPF bridging pension anomaly by more closely aligning with the approach that schemes would have taken.
This technical consultation seeks to establish whether the draft regulations achieve the policy intent.
The changes to PPF compensation rules will come into effect in February 2018, subject to Parliamentary procedures.
Documents
Last updated 29 January 2018 + show all updates
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Added the government response to the consultation.
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First published.