Last November a court ruling clarified that occupational pension schemes set up as part of a scam were eligible to claim on the Fraud Compensation Fund (FCF). This is excellent news for the victims of these scams.
We now have a number of claims from such schemes, with a total value of over £40 million. We expect to receive more claims from schemes which have been confirmed as eligible to apply for compensation.
Why we’re raising this levy
Our 2019/20 Annual Report and Accounts confirmed the FCF had assets of £21.5 million, and if claims exceeded the current assets of the Fund, we’d need to seek additional funding.
Given the value of the claims we’ve already received and our expectation that, following the court ruling, further claims will be made, we need to raise a levy of 75p per member (30p for master trusts) in 2021/22. This is the maximum allowed under current regulations.
We understand the impact this will have on schemes, but there’s no other option if we’re to be able to pay FCF compensation to schemes whose members are victims of occupational pension scheme fraud.
Our next steps
The levy will be collected on our behalf by The Pensions Regulator, together with other fees and levies that all pension schemes must pay.
Find out more about the FCF
Read our previous story on FCF eligibility criteria