The Pension Protection Fund was established to pay compensation to members of certain pension schemes, when they have insufficient funds as a result, broadly speaking, of the associated employer going out of business.
In the majority of cases the level of compensation is lower than the benefits provided by the affected pension schemes, but the PPF does provide a level of security.
What level of compensation is provided by the PPF?
When members of a pension scheme receive compensation from the PPF, there is a basic level of benefit which is subject to further reductions in the case of members below normal retirement age who have higher benefits. In this context, a 55 year old pensioner receiving over c£27K per annum, or a 65 year old receiving over c£34K would be classed as having higher benefits.