More than 330,000 retirees were told their payouts would rise with inflation by as early as January 2027 – but now some have been told they must wait until at least 2028
Thousands of retirees have been told they will have to wait an extra year for increases to their pension payments.
The delay is affecting people who rely on the Pension Protection Fund (PPF) and the Financial Assistance Scheme (FAS).
These are government-backed organisations that step in if the company you work for goes bust, or does not have the funds to pay your pension.
They are designed to protect pension savers with defined benefit schemes, which is a workplace pension that gives you a guaranteed, regular income for life when you retire.
More than 330,000 retirees under these schemes were told their payouts would rise with inflation by as early as January 2027.
But now, the Telegraph reports that 66,000 people have been told they must wait until at least 2028 to see any increase, because the PPF cannot meet the deadline.
Retirement funds that were built up after 1997 are already eligible to be increased in line with inflation – though the same does not apply to any years before that date.
However, ex-Chancellor Rachel Reeves announced changes to this in her final Budget last November – and confirmed that increases for pre-1997 pensions would be introduced, capped at 2.5% annually.
The change is set to boost 265,000 pensions from January 2027. However, another 66,000 of those affected were only entitled to increases on their Guaranteed Minimum Pension (GMP).
A GMP is a minimum pension that a workplace pension scheme normally provides and is normally awarded to people who were contracted out of the additional state pension between April 6, 1978 to April 5, 1997.
These also increase with inflation, capped at 3% a year – though not if the pension is provided through the PPF and FAS. This remaining group will have to wait until January 2028 for any increase.
Pensions from schemes that went bust between January 1997 and April 2005 are covered by the FAS. Beyond this date, they are covered by the PPF. The Mirror has contacted the PPF for comment.
A spokesman told the Telegraph: “Our priority is to implement payments from January 2027 for around 265,000 members whose schemes provided wider pre-1997 increases. This approach gives us the greatest confidence of delivering those payments accurately and on time.
“We will then complete the additional work required for around 66,000 members whose schemes provided increases only on post-1988 GMP benefits, with payments expected from January 2028.
“While we appreciate this will be disappointing for those members, we believe this phased approach is the most effective way to deliver these important changes successfully for everyone affected.”
A government spokesman added: “We are making the biggest change to pension compensation in over 20 years, benefiting over 250,000 PPF and FAS members. The vast majority of eligible members will receive these increases from January 2027, the earliest possible date.”
