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Pension Protection Fund

Volume 493: debated on Thursday 4 June 2009

To ask the Secretary of State for Work and Pensions what the assets of the Pension Protection Fund have been in each year since 2005; what payments have been made from that fund in each such year; and what pension payments he expects to be made from that fund in each of the next six years. (276837)

The information requested is given in the following table.

£

Financial year

PPF Assets1

PPF Payments2

2005-06

141,430,000

3Nil

2006-07

835,514,000

1,402,000

2007-08

1,718,594,000

17,313,000

2008-09

4

4

1 Total assets less current liabilities (not taking into account the long term liabilities of the fund).

2 Compensation payments.

3 No schemes transferred.

4 The PPF is in the process of finalising this information for the annual report and accounts which will be published in the autumn.

Forecast information on expected pension compensation payments for the next six years is not available.

To ask the Secretary of State for Work and Pensions pursuant to the answer to the hon. Member for Coventry South of 13 May 2009, Official Report, column 865, on Rover Group: pensions, what estimate his Department made of the extra costs which would be imposed consequent on the changes to the operation of the Pension Protection Fund in respect of people who took early retirement before the relevant scheme entered that fund; and what assessment he made of the capacity of the Pension Protection Fund levy to meet those extra costs. (276895)

As at April 2008, the estimated cost of removing the 90 per cent. compensation limit and the compensation cap for the people who had taken early retirement before April 2005 in a scheme that had already been admitted into the Pension Protection Fund was around £4 million. That figure is based on the number of individuals affected at that time and does not reflect the costs in relation to early retirees in schemes which entered the PPF after April 2008 or those which may do so in the future as such information is not readily available. The pension protection levy is a matter for the board of the Pension Protection Fund, but any extra costs would be borne by levy payers.

The estimated costs are one factor in the Government's decision not to change the way in which the Pension Protection Fund treats early retirees. The second is equality of treatment between those people who receive PPF compensation. Removing the compensation limit and the cap for some individuals who were under scheme pension age at the time their pension scheme entered the Pension Protection Fund would introduce inequalities in treatment of individuals under normal pension age and lead to a two tier system. The 90 per cent. limit and the cap ensure consistent treatment based on the individual's age at the time their pension scheme enters the PPF. They ensure that people who are able to take early retirement are not placed in a more beneficial position than those who stay in employment.