Can the court make orders in respect of Pension Protection Fund compensation?

What is the Pension Protection Fund?

The Pension Protection Fund is a Statutory Fund whose main function is to serve eligible members of defined pension schemes with compensation. It comes into effect if your employer is made insolvent, particularly if there are insufficient assets in the pension scheme to cover the levels which the Pension Protection Fund provides.

The PPF is run by the Board of the Pension Protection Fund, which was established under the provisions of the Pensions Act 2004 and who has to make payments to members. The PPF is funded by charging annual levies on all eligible schemes and it also holds responsibility for the Fraud Compensation Fund which offers compensation for occupational pension schemes suffering a loss attributed to dishonesty.

Can the court make orders in respect of Pension Protection Fund compensation?

Yes, when considering how to divide the family assets, the court can take Pension Protection Fund Compensation into account – however, the main difference is that the Court makes an order against the Fund, the Court cannot require the fund to provide benefits to be transferred to an external pension scheme. The Court makes an order called a Pension Compensation Sharing Order. The Court can also make Pension Attachment orders known as ‘earmarking orders’ in respect of Pension Protection Fund Compensation, however, again these are paid from the fund.

In deciding how much of the PPF compensation should be shared, the Court has to look at the cash value of the fund. The PPF Fund will make this information available to the Court. The process of dealing with PPF Compensation is very similar to sharing or earmarking in respect of normal pension fund.

The law regarding how pensions are treated when it comes to reaching a financial settlement upon divorce are complex – you need to make sure not just that your solicitor has experience of divorce – but that they are also a specialist in pensions and divorce. Sadly, a surprising number of divorce solicitors really aren’t as up to speed on pension issues as they should be. We think the mishandling of pensions by solicitors will become an increasing source of professional negligence claims over the next few years.

Do you need advice on pensions and divorce from specialists?

Rest assured that our family law and divorce team have the expertise you need. Call us today on one of our local numbers or email us at advice@the–divorce-solicitors.co.uk