Pensions Act 2004

3 (1) Compensation is payable in accordance with this paragraph where, immediately before the assessment date, a person is entitled to present payment of a pension under the admissible rules of the scheme. E+W+S

(2) That person (“the pensioner”) is entitled to periodic compensation in respect of that pension (“the pension”) commencing at the assessment date and continuing for life or, in a case to which sub-paragraph (8) applies, until such time as entitlement to the pension would have ceased under the admissible rules.

(3) The annual rate of the periodic compensation is the appropriate percentage of the aggregate of—

(a) the protected pension rate, and

(b) any increases under paragraph 28 (annual increases in periodic compensation).

(4) In sub-paragraph (3) “the appropriate percentage” means—

(a) in a case to which sub-paragraph (7) applies, 90%, and

(b) in any other case, 100%.

(5) In sub-paragraph (3) “the protected pension rate” means the annual rate of the pension, under the admissible rules, immediately before the assessment date.

(6) In determining for the purposes of sub-paragraph (5) the annual rate of the pension immediately before the assessment date, any recent discretionary increase is to be disregarded if paragraph [F1 35(3A)] applies [F2 to the scheme].

(7) This sub-paragraph applies where the pensioner has not attained normal pension age in respect of the pension before the assessment date and his entitlement to the pension—

(a) is attributable to his pensionable service, and

(b) did not arise by virtue of any provision of the admissible rules of the scheme making special provision as to early payment of pension on grounds of ill health.

(8) This sub-paragraph applies where the pension was not attributable—

(a) to the pensioner’s pensionable service, or

(b) (directly or indirectly) to a pension credit to which the pensioner became entitled under section 29(1)(b) of the Welfare Reform and Pensions Act 1999 (c. 30).

(9) This paragraph does not apply if compensation is payable in respect of the pension in accordance with paragraph 5 (pension benefits postponed at assessment date).

(10) This paragraph is subject to—

• [F3 paragraph 22A (calculation of compensation on and after 1 January 2024),]

• F4 ... and

• paragraph 30 (power of Secretary of State to change percentage rates by order).

Textual Amendments

F1 Word in Sch. 7 para. 3(6) substituted (3.1.2012) by Pensions Act 2011 (c. 19), s. 38(4), Sch. 4 para. 37(2); S.I. 2011/3034, art. 3(i)(v)

F2 Words in Sch. 7 para. 3(6) added (1.4.2009) by Pensions Act 2008 (c. 30), s. 149(1), Sch. 8 para. 2; S.I. 2009/809, art. 2(1)(b)(i)

F3 Words in Sch. 7 para. 3(10) inserted (coming into force in accordance with reg. 1(b) of the amending S.I.) by The Pensions Act 2004 (Amendment) (Pension Protection Fund Compensation) Regulations 2023 (S.I. 2023/1309), reg. 3(2)

F4 Words in Sch. 7 para. 3(10) omitted (coming into force in accordance with reg. 1(b) of the amending S.I.) by virtue of The Pensions Act 2004 (Amendment) (Pension Protection Fund Compensation) Regulations 2023 (S.I. 2023/1309), reg. 3(3)

Modifications etc. (not altering text)

C1 Sch. 7 modified (6.4.2005) by The Pension Protection Fund (Reviewable Ill Health Pensions) Regulations 2005 (S.I. 2005/652), regs. 1(1), 15

C2 Sch. 7 applied (with modifications) (6.4.2005) by The Pension Protection Fund (Reviewable Ill Health Pensions) Regulations 2005 (S.I. 2005/652), regs. 1(1), 14(2)

C3 Sch. 7 para. 3 applied (with modifications) (6.4.2005) by The Pension Protection Fund (Reviewable Ill Health Pensions) Regulations 2005 (S.I. 2005/652), regs. 1(1), 11(1)

C4 Sch. 7 modified (6.4.2005) by The Pension Protection Fund (Compensation) Regulations 2005 (S.I. 2005/670), regs. 1(1), 12 (with reg. 23(3))

C5 Sch. 7 applied (with modifications) (6.4.2005) by The Pension Protection Fund (Hybrid Schemes) (Modification) Regulations 2005 (S.I. 2005/449), regs. 1(1), 3(2)-(4)

C6 Sch. 7 applied (with modifications) (6.4.2005) by The Pension Protection Fund (Reviewable Ill Health Pensions) Regulations 2005 (S.I. 2005/652), regs. 1(1), 13(1)

Commencement Information

I1 Sch. 7 para. 3 in force at 6.4.2005 by S.I. 2005/275, art. 2(7), Sch. Pt. 7