Thousands of retirees will be forced to wait an extra year for vital pension increases because a government compensation scheme cannot pay them on time.More than 330,000 retirees who rely on the Pension Protection Fund (PPF) and the Financial Assistance Scheme (FAS) were promised their payouts would finally start rising with inflation by as early as January 2027.Both government-backed organisations were launched to cover payouts from failed pension schemes.However, 66,000 scheme members have been told they must wait until at least 2028 for the uplift because the PPF, which handles every payment, cannot meet the deadline.Maurice Alphandary, a PPF member, said he was “disgusted” by the news while Terry Monk, a fellow campaigner, said people were “dying waiting”.Pensions from schemes that went bust between January 1997 and April 2005 are covered by the FAS, with the PPF stepping in after that.But while pensions accrued after 1997 can be increased with inflation, uplifts are not applied to any years built up before that date.Campaigners spent years fighting to change the rules and in last November’s Budget, Rachel Reeves, the former chancellor, finally announced inflationary increases for pre-1997 pensions.Although it is capped at 2.5pc, the move will boost 265,000 pensions from January 2027.However, another 66,000 of those affected were only entitled to inflationary increases on their Guaranteed Minimum Pension (GMP), a separate element built up with their employer as a result of being “contracted out” of the additional state pension.Under contracting out, in return for making lower National Insurance contributions, employers had to provide staff with additional pension payments that were at least as good as the extra state pension they would have received.They also had to increase the additional element in line with inflation, up to a maximum of 3pc a year. But this is not offered by the PPF or FAS.
