In an apparently unrelated announcement, Steve Webb confirmed at the end of June that the PPF compensation cap (currently £34,867.04) would be amended to take account of long periods of pensionable service "as soon as Parliamentary time allows". He acknowledged that the current PPF compensation cap could have a disproportionate effect on those members with long periods of pensionable service.
The revised cap will be increased by 3% for every full year of service over 20 years, subject to a maximum of double the standard cap. The changes will not apply retrospectively. Anyone covered by the change who is in receipt of capped compensation will receive increased PPF compensation from the date the legislative changes come into force. Schemes which enter wind up, or commence a PPF assessment period, after the revised cap is introduced will be affected.
There is no reference to the Hogan decision in the written ministerial statement (full text here) but the timing is highly coincidental following the questions raised by the case. One consequence of the increased PPF compensation cap will be an increase to the scheme liabilities on a PPF/s179 valuation basis (and an accompanying increase in PPF levies to reflect the additional liabilities). Schemes who have exited from a PPF assessment period with funds in excess of 100% of PPF liabilities will no doubt wish to talk to their advisers, as will schemes currently operating as closed schemes.
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