Hundreds of retired individuals have been informed that they will face an extended wait for their pension payments to increase. This delay affects beneficiaries of the Pension Protection Fund (PPF) and the Financial Assistance Scheme (FAS), which are government-backed entities that intervene if a company cannot fulfill its pension obligations.
These organizations safeguard individuals with defined benefit schemes, ensuring a guaranteed income upon retirement. Over 330,000 retirees covered by these schemes were initially advised that their pensions would be adjusted for inflation starting in January 2027. However, a recent report by the Telegraph reveals that 66,000 of them will have to wait until at least 2028 for any increment due to the PPF’s inability to meet the deadline.
Pension funds accumulated after 1997 are already eligible for inflation-linked increases, with adjustments capped at 2.5% annually. Nevertheless, former Chancellor Rachel Reeves announced modifications in her last Budget, stating that pre-1997 pensions will also receive increases, limited to 2.5% per year.
This change is expected to benefit 265,000 pensions from January 2027. However, the remaining 66,000 individuals affected will only see enhancements in their Guaranteed Minimum Pension (GMP), a minimum pension typically granted to those who were contracted out of the additional state pension between 1978 and 1997. GMP increases are usually capped at 3% annually, except for those under the PPF and FAS, who will have to wait until January 2028 for any raise.
Pensions from companies that collapsed between 1997 and 2005 fall under the FAS, while those after 2005 are covered by the PPF. The Mirror has reached out to the PPF for comments on the matter.
A PPF spokesperson affirmed that priority is given to implementing payments for the majority of members from January 2027, with the rest expected to receive their adjustments from January 2028. The government also stated that this alteration represents a significant improvement to pension compensation, benefiting over 250,000 PPF and FAS members, with the majority set to receive increases from January 2027 onwards.
