The bail-out fund created to protect members of ‘gold-plated’ pension schemes is to tell 330,000 former staff of bust firms they will share almost £2billion in compensation after their retirement payments failed to keep pace with rising prices.
In what one source described as a ‘huge exercise’, the Pension Protection Fund (PPF) will next month write to scheme members – many of whom are now in their late 70s or 80s – who lost out when their pensions did not rise in line with inflation.
They belong to defined benefit pension plans that pay a regular guaranteed income based on a worker’s salary and length of service.
These were popular before the turn of the century until they became too expensive for their sponsoring employers and were closed to new joiners.
Most firms tied their pension payments to the rate of inflation, meaning members would not be worse off in real terms.
