300,000 retirees who did not receive payouts due to inflation-linked increases

A change in the law is expected to increase the retirement savings of over 300,000 pensioners

You should receive a letter next month if you qualify.

A portion of nearly £2 billion in top-up payments are due to pensioners who were enrolled in specific pension plans of defunct businesses.

Starting in July, the Pension Protection Fund (PPF), an industry-funded rescue fund for defined benefit pension plans, will start writing to more than 300,000 former employees of failing companies. Payments are scheduled to begin in January 2027.

These retirees lost out on inflation protection, which they should have received as part of their pension benefits from their employers' pension plans. As a result, their pension should have increased in tandem with prices, but it did not.

Based on a worker's salary and length of service, defined benefit pensions provide a consistent, guaranteed income. Many are closed to new members, but the inflation protection that increased retirement income makes them especially valuable.

Watch the entire video here. However, prior to 1997, some pensioners were denied this important benefit by their former employers in companies that subsequently failed.

They will now receive the money they are due thanks to a recent rule change. The Pension Schemes Act went into effect in April, enabling the Financial Assistance Scheme (FAS) and the PPF to make the extra inflation-linked payments.

Millions of UK defined benefit plan participants are protected by the PPF in the event that their employer files for bankruptcy. A distinct but comparable government-funded program called the Financial Assistance Scheme (FAS) was created to assist people whose employers went bankrupt between 1997 and 2005. The PPF oversees both.

"A key component of the PPF's role is supporting our members," a PPF spokesman stated. For many PPF and FAS members, the government's decision to allow us to pay inflation increases on pre-97 compensation will improve results.

"It will take a lot of work to implement this change, but we are making good progress so that eligible members can begin receiving these increases in January 2027. Throughout, we'll keep members completely informed."

Who is going to get paid?

Members of PPF and FAS whose prior pension plans promised to give their members inflation-linked increases in their retirement benefits prior to 1997 are covered by the new law.

The law did not require employers who offered defined benefit scheme pensions to also provide inflation protection for their members' retirement income prior to 1997, long before the PPF and FAS were established.

In actuality, most defined benefit pension plans included inflation protection in their rules, though not all of them did.

The Pensions Act of 2004, which established the PPF and FAS, prohibited these lifeboat funds from giving all of their members pre-97 inflation-linked increases.

However, PPF and FAS members whose previous plans guaranteed pre-97 indexation as a right are now covered by the amendment to the Pension Schemes Act.

All 2,000 schemes that were transferred to the PPF and FAS have had their scheme rules reviewed by the PPF in recent months.

The PPF has concluded that more than 300,000 members will be eligible for future inflation-linked pension increases prior to 1997.

Members of the impacted pension plan are exempt from action. Starting next month, those who qualify will receive letters from the PPF.