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Factors

If you're a pension professional, you'll find useful information about our factors on this page. 

Please note: From time to time we review our factors and they may be changed without notice.

Commutation factors 

An individual, entitled to but not yet receiving compensation, may be able to commute some of their compensation for a lump sum from the time it becomes payable. 

The circumstances in which commutation is possible are set out in Regulation 19 of the Pension Protection Fund (Compensation) Regulations 2005. Regulation 21 sets out how this option may be exercised. 

The amount of lump sum payable, per £100 of compensation given up, is set out in our commutation factors table. 


Early retirement factors

An individual, entitled to but not yet receiving compensation from the fund, may be able to have it paid earlier than their normal pension/benefit age. 

The circumstances in which early payment is possible are set out in Regulation 2 of the Pension Protection Fund (Compensation) Regulations 2005. 

Pension compensation calculation

The amount of pension compensation payable early is calculated according to our commutation factors table. This applies to all compensation determinations for early retirement. 

Lump sum calculation 

The amount of lump sum compensation that can paid early - where the lump sum is a separate entitlement from pension, rather than derived by commuting pension- is calculated according to our commutation factors lump sum table. 

Late retirement factors 

An individual, entitled to but not yet receiving compensation from the fund, may be able to postpone payment past their normal pension age. 

The Pension Protection Fund (Compensation) Regulations 2005 permit the postponement of compensation and any separate lump sum is specified circumstances up to age 75.

Pension compensation calculation

The amount of pension compensation, payable late, is a calculated according to our late retirement factors table. 

Lump sum calculation

The amount of pension compensation, payable late, is calculated according to our late retirement factors lump sum table. 


Step-down factors

The factors in our step-down factors table should be used for determining the lifetime equivalent value of a step-down pension. 

In all determinations, the compensation cap must be compared with an annual value of benefits. To calculate the maximum amount of cash that can be taken through commutation, the factors should be used alongside the commutation factors.


Early retirement factors for a step-down pension 


For an early retirement, the amount of early step-down pension compensation is calculated according to the factors in the early retirement factors table. 

Compensation cap factors

The compensation cap was used to assess the level of compensation that we paid to individuals. 

Paragraphs 26 and 27 of Schedule 7 of the Pensions Act 2004 set out the circumstances in which the compensation cap applies and how and when it should be increased. In July 2021 the Court of Appeal ruled the PPF compensation cap was unlawful on the groups of age discrimination, so we're no longer applying it and we're removing it from affected PPF pensioners. 

The compensation cap was also used in valuation calculations requited under Sections 179 and 143 of the Pensions Act 2004. 

Information on previous compensation cap factors is provided for advisers who still need to refer to previous calculation tables and factors. 

Factors for previous periods