The Pensions Minister, Torsten Bell, has warned that calls to use the Pension Protection Fund’s (PPF) surplus to fund inflationary increases are not as “straightforward” as suggested.

The government has recently faced growing calls to review the level of compensation received by PPF members and assistance from the Financial Assistance Scheme (FAS), specifically in relation to the award of pre-97 indexation.

In the final session on its pensioner poverty inquiry, Work and Pensions Committee chair, Debbie Abrahams, asked the Minister about the latest updates on these calls for change, emphasising the need for many members impacted are in "dire circumstances".

She also pointed out that whilst there is a surplus of £12bn in the PPF, estimates to provide an uplift for PPF and FAS members have suggested a cost of around £93m in years six and seven.

"I appreciate this is several governments' responsibilities," she clarified, emphasising however, that "we are the ones holding the can now".

"I'm afraid I can't understand the reason not to enable them to spend the last few years of their life in some comfort," she said.

In his response, Bell confirmed that he has met with many of the members impacted by this issue, emphasising that he was “absolutely aware of the issues” and of the urgency needed, given the average age of those impacted.

He also acknowledged that the legislation in terms of how pre-1997 indexation is set out reflected the defined benefit (DB) pension systems as they stood, pointing out that there was no legislative requirement for indexation pre-1997 within the private sector schemes.

However, Bell emphasised that “it is not a straightforward situation of ‘there is a nice surplus that could fund that’, because the balance sheet of the PPF sits within the public balance sheet".

“So this is a, this is a wider question for the public finances, the public finance implications are not just the impact on the FAS, any increase in liabilities for the PPF immediately scores.

"It does need to be looked at properly, it needs to be considered in the round in terms of those wider impacts, just like all public policy matters are.

"So I'm aware and I'm looking at it, but the public finance implications are more complicated."

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