Workplace Pensions: Index Linking
The question
To ask the Secretary of State for Work and Pensions, how many pension scheme members affected by the absence of pre-1997 indexation will receive indexation; and how many affected members will not receive indexation because they are in schemes that remain in operation.
Answered by Torsten Bell
At the Budget, the Chancellor announced that the Government will introduce pre-1997 indexation in the Pension Protection Fund (PPF) and the Financial Assistance Scheme (FAS), for members whose original schemes provided this. Compensation payments from these schemes on pensions built up before 6 April 1997 will be CPI-linked (capped at 2.5%), and this will apply prospectively.
The PPF have made an assessment that around 165,000 PPF members and 91,000 current FAS members will benefit from this change as they have some pre-97 benefits where their former schemes provided mandatory indexation.
Analysis published last year by the Pensions Regulator shows that, as of March 2023, around 17 per cent of members of private sector defined benefit pension schemes do not receive indexation on benefits accrued before 1997. This information can be found at: thepensionsregulator.gov.uk/en/document-library/research-and-analysis/data-requests
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