Pension: DWP appeal court compensation ruling creating 'several pitfalls' for your schemes

The compensation cap can be tapered and based on age, with the PPF explaining that the cap, “only applies to members that haven’t reached their scheme’s normal pension age when the employer becomes insolvent.”

It adds: “The total amount of compensation you can receive each year is capped at a certain level, although the vast majority of members are not affected by this cap.

“From April 1, 2020, the cap at age 65 has been set at £41,461. This is an increase of 3.6 percent from the 2019/20 cap which was £40,020. The increase reflects the level of wage inflation over the period.

“As the cap is applied before your compensation is reduced to 90 percent of our levels, the actual amount you would receive as a capped member retiring at 65 is £37,315.

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