Altmann slams PPF cap change delays

Her sustained pressure on the Department for Work and Pensions since leaving office suggests she may well have a greater impact on pensions reform outside the executive than she did in it.

The latest headache for new minister Richard Harrington comes on the planned raising of the current £33,678 Pension Protection Fund cap for long-serving employees.

The Pensions Act 2014 laid the foundations for a compensation cap which would increase by 3 per cent for every year over 20 worked at the sponsoring (now insolvent) employer.

Altmann claimed that secondary legislation, which is required to bring the changes into effect, had been planned for parliament last week, but that Theresa May’s new government had delayed it until after the summer recess.

Since the changes will not be applied retrospectively, implementing the legislation will mean that long-serving pensioners will have to wait even longer to get a fair level of benefits.

“The biggest problem is that every day of delay is money they will never see, and it’s money that the PPF has budgeted for,” said Altmann.

“This is just a classic example of how government can let down ordinary individuals and too often fails to take into account the real needs of those waiting for official action.”

The DWP denied that any date had been set for the regulation to pass through parliament, and said the reform remains its priority.

A spokesperson said: “The PPF long-service cap will give additional support to someone whose compensation has been capped and was a member of a pension scheme for over 20 years. We’ve committed to bringing this change in and will be legislating as soon as possible.”

Only a small proportion of the PPF’s almost 300,000 members would find their benefits being capped under the current rules.

However, a 2013 impact statement from the DWP showed how particularly long-serving pensioners could be paid around half what their employer had originally promised them.

Enormous challenges face government departments

"It's a no-win situation when schemes aren't fully funded for various reasons," said Giles Payne, director at professional trustee company HR Trustees.

"These people have been expecting to get their full benefits, and budgeting and planning their lives around their full benefits. Suddenly they find they don't have them."

He said he could understand how the issue might have slipped down the DWP agenda, given the enormity of the challenges facing all government departments after the Brexit vote and the cabinet reshuffle.

"I suspect everything's been overtaken by the last four weeks, and I'm not totally surprised that one or two things get held up or go by the wayside in the meantime."

He added the department would have to pull off a "balancing act" between rewarding pensioners and members who have been long-serving employees, and dealing with schemes approaching insolvency but not yet in the PPF.

2014 data from the Office for National Statistics showed that the average gross income of retired households was still significantly below the PPF cap at £22,553 a year.

"We've got a lot of schemes in trouble paying the PPF levies," Payne said.

"It's justified that longer servers have a a better protection, but equally I'm very aware that there is a limited amount of funds and effectivey you're asking for employers running pension schemes to pay more."