Southdown 2026 - Blog , Uncategorized

PPF and FAS Members Set to Benefit from The Pension Schemes Act

Fri, 12 Jun 2026 07:54:59 +0000

Recent changes introduced through the new legislation are set to enhance benefits for many members of the Pension Protection Fund (PPF) and the Financial Assistance Scheme (FAS), while also helping to reduce costs for levy payers.

The changes represent a significant step forward, strengthening member outcomes and providing greater flexibility for schemes with surplus assets.

One of the most important changes introduced by the Act concerns inflation increases on pension benefits earned before 1997.

Historically, pensions in payment relating to pre-1997 service did not receive inflationary increases through the PPF, even where the original occupational pension scheme provided such protection. Under the new legislation, the PPF will now be able to apply future inflation increases of up to 2.5% per annum to these benefits where the original scheme rules included inflation protection.

Broadly, two groups of members are expected to benefit.

1. Members Whose Original Scheme Rules Included Pre-1997 Indexation

Many occupational pension schemes provided inflation increases on pension benefits earned before 1997. Where these increases were required under the original scheme rules, members will, in most cases, begin to receive annual increases of up to 2.5% on all of their pre-1997 benefits through the PPF or FAS.

The PPF estimates that this change will benefit approximately:

180,000 current PPF members, and
85,000 current FAS members.

For many pensioners, this represents a valuable enhancement to their retirement income and provides additional protection against the effects of inflation.

2. Members with Post-1988 Guaranteed Minimum Pension (GMP) Indexation Only

Some schemes provided inflation increases only on Guaranteed Minimum Pension (GMP) benefits accrued between 6 April 1988 and 5 April 1997, with no increases applying to other pre-1997 pension rights.

Guaranteed Minimum Pension is the minimum level of pension that contracted-out occupational schemes were required to provide. Under the new legislation, members of these schemes will generally become entitled to inflation increases on the relevant post-1988 GMP element of their pension through the PPF or FAS.

The PPF expects this change to affect approximately:

39,000 current PPF members, and
27,000 current FAS members.

How Can Members Check Whether Their Scheme Is Eligible?

The PPF has published a list of schemes whose members may qualify for these additional increases. Members who believe they may be affected should consult the list or await further communication from the PPF or FAS, which expects to begin writing to affected members during the summer.

A list of all eligible schemes can be found here: https://www.ppf.co.uk/our-members/pre97-schemes

How will this impact on PODE Reports ?

Where a PPF member belongs to a scheme that is eligible we will factor into our calculations these changes

Implementation Already Underway

Work to implement the new measures has already begun, and the PPF has confirmed that it intends to start writing to affected members during the summer. Members who may benefit from the changes can therefore expect further communication in the coming months.

These reforms represent a welcome development for many pensioners, delivering improved benefits and ensuring that members receive protection more closely aligned with the promises made under their original pension schemes.

Changes to Public Sector Scheme CEV Calculations

Wed, 27 May 2026 09:10:55 +0000

The Background

The Government announced on 19 May 2026 that the discount rate that public sector schemes use to calculate Cash Equivalent Values (CEVs), and by extension pension credit benefits, has increased. This means that the actuarial factors prepared by the Government Actuary Department (GAD) and used by PODEs such as ourselves, are subject to change. The GAD has currently suspended calculation of all CEVs for pensions on divorce, and the new factors will follow in due course.

What is the expected impact ?

Broadly, the change means that CEVs calculated for pension on divorce will reduce.

The reduction will vary by a number of factors, but in simplified terms could lead to reductions of up to around c4%for members at or very close to retirement age and c10% for members within20 years of retirement (and broadly something in between for members somewhere between 0 and 20 years from retirement).

Implications if the member spouse has any public sector pensions

The change means that, for any pension share that is due to be implemented after the new factors come into force, the CEV(s) used for implementation will be lower (by broadly the amounts discussed above) compared to those calculated using the ‘old’ factors (i.e. those in force prior to the announcement yesterday) – all other things being the same.

However, it is worth noting that as most¹ public sector schemes only permit internal pension sharing, then the change will also impact the factors used to calculate pension credit benefits in broadly the opposing direction for internal shares.

This means that for an internal pension share, overall, a lower CEV may still give rise to a similar level of pension credit and therefore the calculated pension share(s) are likely to be similar to if recalculated on the new factors.

But…the position is a little more nuanced

However, there will be cases where this does not hold true, most notably where:

There is a material age gap between the parties, as the CEV factor depends on the member spouse’s age and the pension credit factor depends on the ex-spouse's age, and these will not always move by the same amount.

There is a material gap between the age when the member spouse’s pension beneﬁts come into payment and the age when the ex-spouse’s pension credit beneﬁts come into payment (most typically this will be in the uniformed schemes).
The share is calculated assuming an external transfer in certain LGPS² cases. In such cases the ex-spouse receives a share of a lower CEV (compared to the same CEV calculated on the old factors). The change is also likely to make external implementation of pension credits arising from the LGPS slightly less beneﬁcial.
The interaction with the McCloud remedy and the new factors gives rise to additional complexities and considerations (in practice likely to be rare edge cases).

It’s worth noting that in practice, a change in figures arising from any of the above, may still not be material in the overall context of pension sharing outcomes. However, we raise these as additional points to consider when discussing with your clients.

Is that everything ?

The change is likely to impact other factors, such as those used to adjust benefits paid early or late, but is generally anticipated to have a more modest impact on overall results. The true impact, however, will only be known with the benefit of the updated factors.

Implications if the ex-spouse only has public sector pensions which are not being shared

While the change would reduce the CEV calculated in respect of public sector benefits, the change does not directly impact the actual income (and/or lump sum), and so is not expected to have a material impact on outcomes (whether we are assessing income or capital).

What should you do for ongoing cases ?

Largely business as usual, as in many cases the change is likely to be broadly neutral on the calculated pension sharing outcomes.

However, it is worth taking into account the cases described above where this may not be the case.

1 The Local Government Pension Scheme is the exception as it offers the choice between an internal pension credit and an external transfer as well.

2 Depending on facts and circumstances of each case, as it may be more beneficial to both parties to implement an internal share, in which case similar arguments discussed for other public sector schemes