A bill proposing the Pension Protection Fund should remove its compensation cap has been scrapped due to Parliament’s dissolution.
Lord Richard Balfe introduced the Pensions (Amendment) Bill to his peers on October 30, but it will not progress any further after the December election caused Parliament to be dissolved.
The second reading of the bill wasn’t even scheduled before it was thrown out, although Lord Balfe may reintroduce the bill when Parliament returns.
The bill intended to firstly remove the PPF compensation cap for those currently receiving compensation, as well as any future recipients.
The total amount of PPF compensation individuals can receive each year is currently capped at a certain level. From the April 2019, the cap at age 65 was set at £40,020. This was an increase of 2.6 per cent on the 2018/19 cap which was £39,006.
This compensation is paid to members of defined benefit pension schemes when a business has entered insolvency and where there are insufficient assets in the pension scheme to cover PPF levels of compensation – typically 90 per cent of the benefits due.
The bill also called for legislation to require approvals from The Pensions Regulator and the scheme trustees before corporate dividends are agreed.
The Pension Schemes Bill was also lost but ministers have assured that this will make a comeback in the next parliamentary session.
The bill, which was announced in the Queen’s Speech, included long-awaited rules on pension dashboards, collective defined contribution schemes, and new powers for The Pensions Regulator.
Minister for pensions and financial inclusion Guy Opperman said last month it was “regretful” that a general election had got in the way of the bill but stressed it would come back as there was cross-party support for it.
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