Pension Protection Fund
This is a compensation scheme run by an independent board to protect the pension promise made by occupational defined benefit pension schemes. It became operational in April 2005 and provides compensation where a company with a defined benefit pension scheme becomes insolvent, and its pension fund is not sufficiently funded.
Scheme members still receive the core of the benefits to which they were entitled, covering 100% of the original pension promise for people who have reached the scheme's pension age and 90% for people below that age.
The Pension Protection Fund also includes indexation of pensions in payment on rights built up after '97 in line with RPI capped at 2.5%, and revaluation of all deferred rights in line with RPI capped at 5% to ensure the PPF compensation retains its value over time and provides a meaningful level of retirement income. It also hopes, in most cases, to offer survivors' benefits for married and civil partnerships.