UK lifeboat scheme to amend benefit cap for long-time workers
UK – The UK’s Pension Protection Fund (PPF) is to see its statutory benefits cap amended, with the government announcing plans for more generous benefits for workers with payment records over 20 years.
Detailing the revised cap – with benefits previously limited to £31,380 (€35,854) per annum if a defined benefit (DB) scheme entered the PPF – pensions minister Steve Webb stressed that the changes would not apply retroactively.
“I propose that the compensation cap will be increased by 3% for every full year of service above 20 years,” he said in a written statement laid before the House of Commons. “There will still be a maximum, which will be double the standard cap.”
He added: “This revised compensation cap will not be backdated. Anyone covered by this change who is already in receipt of capped compensation will get any increase from the date the relevant legislation is in place.”
Under the new system, Webb noted that someone with a DB pension of £50,000 and 40 years of contributions to the eligible scheme would be entitled to £45,000, if they drew their pension after 65.
The chance follows Webb’s decision to review the cap, announced during a parliamentary debate on the benefits of workers in the Visteon pension fund.
The fund entered administration in 2009, at the time with a deficit of £350m.
Union Unite filed a lawsuit in 2011 alleging that Visteon, a supply group sold by car manufacturer Ford in 2000, offered workers assurances that pension benefits would be secure after the sale.