Category: Pensions · Reviewed by Chrissie Anderson, Client Executive · Last reviewed 2026-06-10
The Pension Protection Fund (PPF) is a statutory fund established by Part 2 of the Pensions Act 2004 to pay compensation to members of eligible defined benefit pension schemes where the sponsoring employer becomes insolvent and the scheme is unable to meet its liabilities. The PPF is funded by levies on eligible schemes (the risk-based pension protection levy and the scheme-based levy) and by investment of its assets. As at March 2024 the PPF had over £39bn in assets under management and protected around 10 million members across approximately 5,000 eligible schemes.
Category: Pensions Also known as: PPF Statutory basis: Pensions Act 2004, Part 2 Related concepts: PPF, Defined benefit pension, The Pensions Regulator
PPF compensation is generally 100% of accrued benefits for members already over their scheme’s normal pension age at the assessment date, and 90% of accrued benefits subject to an annual cap (£44,549.20 cap at 90% for 2024/25, equating to £40,094.28 compensation) for members below NPA. The PPF also operates the Fraud Compensation Fund for losses arising from dishonesty affecting an occupational pension scheme.
Pensions Act 2004, Part 2 (ss.107–220). PPF eligibility requires the scheme to be an eligible DB or hybrid scheme; non-eligible schemes (including DC schemes, public sector schemes covered by a statutory guarantee, and unfunded schemes) are outside the PPF. CJEU rulings (notably Hampshire v PPF C-17/17) have required adjustments to PPF compensation to ensure each member receives at least 50% of accrued benefit.
PPF compensation applies once the employer becomes insolvent (in the technical sense of the Pension Protection Fund (Entry Rules) Regulations 2005) and the scheme passes through the PPF assessment period of approximately 18–36 months. Schemes well-funded enough to provide PPF-level benefits without PPF entry are bought out with an insurer instead.
A 5,000-member DB scheme sponsored by a manufacturer enters PPF assessment when the sponsor goes into administration. The assessment period takes 24 months; the scheme’s funding level is below PPF compensation level so the scheme enters the PPF. Members already past NPA receive 100% of their entitlement (capped) and active and deferred members receive 90% subject to the cap.
This entry is part of the Apex Insurance Wiki. Last reviewed by Matt Bartlett on 2026-06-10. Next review: 2026-12-10.
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