The PPF, or Pension Protection Fund, is there to protect those who are tied into a private pension scheme where the provider becomes insolvent. This doesn’t apply to your state pension or SIPP. After an assessment has been made, your scheme can be transferred to the PPF and you will not lose the money you have been paying in over the years. In the current economic climate, this is becoming increasingly common and many are grateful for the existence of the PPF.
The PPF assessment seems complicated but is relatively straightforward when you look at it properly. The first part of the assessment process is when the insolvency of the pension provider is established, for example by the appointment of administrators, the insolvency practitioner will send a document known as a Section 120 to the PPF to confirm the insolvency.
The PPF then work with the trustees of the scheme to gain the necessary information which will determine whether or not the scheme is eligible to go into the PPF. Once the information is received the PPF have up to 28 days to make that decision, if the scheme is eligible the Section 120 will be validated and the scheme will start the longest part of the assessment period, and the assessment start date will be the same date as the insolvency.
The long period of assessment is due to all the data being checked and verified, and when there are administrators involved this can be a very lengthy process. Everything must be above board and the correct level of compensation is determined. One this is completed the transition period begins, where all the reviews and then transferral of both the members details and scheme assets take place.
Once all this has been completed, and the scheme has been proven to have insufficient assets, it will pass over to the PPF. All members will be notified of this event and supplied with contact details for the PPF.
