Pension Protection Fund (PPF) — What It Is and Does It Cover You? UK 2026/27

The Pension Protection Fund (PPF) is a safety net for defined benefit pension members whose employer becomes insolvent. If your final salary scheme cannot pay what it promised, the PPF steps in — but compensation is capped, and defined contribution pensions are covered separately under different rules.

PPF at a Glance

Who the PPF Covers

The PPF covers members and survivors of eligible defined benefit (DB) occupational pension schemes registered in England, Wales, or Scotland. This includes:

• Final salary schemes
• Career average revalued earnings (CARE) schemes
• Hybrid schemes with a DB element

It does not cover:

• Defined contribution (DC) workplace pensions
• SIPPs or personal pensions
• Group personal pensions
• The State Pension
• Unfunded public sector schemes (teachers, NHS, civil service, police, armed forces — these are backed by the government directly)

What You Receive from the PPF

Already drawing your pension

If you had already reached the scheme’s normal pension age and were receiving your pension when the employer became insolvent, you receive 100% of the pension in payment — subject to the annual compensation cap.

Not yet drawing your pension

If you had not yet reached the scheme’s normal pension age, you receive 90% of the pension you had accrued — again subject to the compensation cap.

The 2026/27 compensation cap is £49,710.68 per year at age 65. The cap is adjusted for different ages — lower if you claim early, higher if you draw later than 65.

Worked Example

Margaret, age 58, has 25 years in a final salary scheme. Her projected pension at normal pension age 65 was £24,000/year. The employer becomes insolvent.

• Accrued pension at time of insolvency: approximately £24,000/year (projected)
• PPF pays 90% × £24,000 = £21,600/year when Margaret reaches 65
• This is below the £49,710 cap, so the full 90% is paid
• Margaret receives annual increases of CPI capped at 2.5%

If Margaret’s projected pension had been £60,000/year:

• 90% would be £54,000 — but this exceeds the £49,710.68 cap
• PPF would pay £49,710.68/year, not £54,000

The PPF Assessment Period

When an employer becomes insolvent:

1. An insolvency practitioner notifies the PPF
2. The scheme enters a PPF assessment period (typically 12–24 months)
3. The PPF assesses whether scheme assets can buy annuities at PPF compensation levels
4. If yes → scheme rescue — the scheme transfers to an insurance company
5. If no → the PPF takes over the scheme and begins paying compensation

During assessment, members continue receiving payments at PPF levels. You do not need to take any action — the process is managed automatically.

PPF vs FSCS: Key Differences

How to Check If Your Pension Is Protected

1. Identify your scheme type — is it final salary (DB) or defined contribution (DC)?
2. For DB schemes — check the PPF’s eligible schemes register or ask your employer’s pension administrator
3. For DC / personal pensions — check your provider is FCA-authorised and ask whether your assets are held in trust (FSCS protection may apply)
4. For public sector workers — your pension is directly backed by government, not the PPF

See our can I stop pension contributions guide, pension expression of wishes guide, and pension in bankruptcy guide.

Related Guide

• Workplace Pensions UK 2026/27 — Auto-Enrolment, Salary Sacrifice and DB vs DC Guide