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Written question asked by Ian Sollom (Liberal Democrat) on Wednesday, 20 May 2026, in the House of Commons. It was due for an answer on Monday, 1 June 2026. It was answered by Torsten Bell (Labour) on Wednesday, 10 June 2026 on behalf of the Department for Work and Pensions.

Financial Assistance Scheme

Question

To ask the Secretary of State for Work and Pensions, what components are included in the Government's estimate of around £2 billion for the cost of Financial Assistance Scheme pre-1997 indexation; and whether that figure includes (a) arrears, (b) indexation at a CPI cap above 2.5%, and (c) post-1997 assistance costs.

Answer

The Government has brought forward legislation to introduce increases on compensation payments from the Pension Protection Fund and Financial Assistance Scheme that relate to pensions built up before 6 April 1997. These will be CPI-linked (capped at 2.5%) and apply prospectively (i.e. to payments going forward) for members whose former schemes provided for these increases.

At the Budget, the cost of this measure was estimated to be around £0.3 - £0.6 billion for the Financial Assistance Scheme over the lifetime of the scheme.

The Pension Protection Fund has previously estimated that the cost of providing both prospective and retrospective pre-1997 indexation in the Financial Assistance Scheme is around £2 billion for members whose former schemes had provided such indexation. This estimate is broken down as follows:

a) It includes arrears for retrospective pre-1997 pension increases of CPI capped at 5%: £0.5 billion.

b) It includes prospective and retrospective pre-1997 pension increases of CPI capped at 5%: £1.3 - £2.0 billion.

c) The estimate of £2 billion does not include post-1997 assistance costs.

Secondary information

Type
Written question
Reference
3569
Session
2026-27
Related items
Financial Assistance Scheme
Friday, 19 June 2026
Written questions
House of Commons
Subjects
Costs Arrears Financial assistance scheme
Contains statistics
Yes
Link
View this Written question on www.parliament.uk