| Statutory corporation overview | |||
|---|---|---|---|
| Formed | 2005 | ||
| Jurisdiction | United Kingdom | ||
| Parent department | Department for Work and Pensions | ||
| Website | ppf | ||
| |||
The Pension Protection Fund (PPF) is a UK statutory corporation established by the Pensions Act 2004 to provide compensation to members of eligible defined benefit (DB) pension schemes when their sponsoring employer becomes insolvent and the scheme cannot meet its promised benefits. [2] [3] The PPF is funded by a levy on eligible schemes, income from investments, assets from schemes that transfer into the fund and recoveries from insolvent employers. It is not funded by general taxation. [4] As of 31 March 2025 [update] , the PPF reported assets under management of £31.2 billion. [5]
The PPF is run by an independent board and is accountable to Parliament through the Secretary of State for Work and Pensions. [6] It also administers related arrangements including the Fraud Compensation Fund (FCF) and the government’s Financial Assistance Scheme (FAS). [7] [8]
The PPF protects most occupational DB schemes in the UK. Public sector DB schemes backed by a Crown guarantee are not covered by the PPF. [9] [10]
All eligible schemes are required to pay an annual levy which contributes towards the administration of the fund and the compensation it pays to members. [11]
When a sponsoring employer suffers an insolvency event, a scheme does not automatically enter the PPF. Instead, it first enters an assessment period, typically lasting 18–24 months, during which scheme data are validated and the PPF assesses the scheme’s assets and liabilities. [12] Trustees remain responsible for day-to-day running and for paying pensions during assessment. If the scheme can afford to secure benefits at or above PPF compensation levels (for example, by purchasing annuities), it will wind up outside the PPF, otherwise, the scheme’s assets transfer to the PPF and the Board assumes responsibility for paying compensation. [13]
The Pension Protection Fund pays compensation to members of eligible defined benefit schemes whose sponsoring employer becomes insolvent and the scheme cannot afford to pay the benefits promised.
Level of compensation
Increases once in payment
Revaluation before payment
Early, normal and late retirement
Survivors’ compensation
Lump sums
One of the PPF’s four funding sources is an annual levy charged to eligible DB schemes. [29] The levy has two components:
The PPF’s insolvency risk partner assesses the likelihood of a sponsoring employer becoming insolvent each month and generates an insolvency risk score. The PPF averages scores over a 12-month period (April–March) and allocates employers to one of ten levy bands, each with a different levy rate. Higher-risk bands attract higher levy rates. [30]
In January 2025 the PPF set a levy estimate of £45 million for 2025/26 and included in the rules a provision to recalculate the conventional levy to zero if appropriate legislative changes progressed during the year. [31] [32] On 23 September 2025 the PPF confirmed that it would not charge a conventional levy for 2025/26. [33] [34] This change set both the scheme-based and risk-based levy rates to zero and saved schemes and sponsors about £45 million in that year.
Press coverage linked the announcement to stronger DB scheme funding and to proposed legislative changes that would allow a zero levy without blocking future increases if required. [35] [36] For comparison, the levy estimate was £100 million in 2024/25 and £200 million in 2023/24. [37]
A list of schemes that have transferred into the PPF is available on the PPF website. [38]
... now that the compensation cap has been removed ...