The Pension Protection Fund cuts compensation taken before normal pension age by an early retirement factor: on its tables from 1 October 2025, retiring at 60 with a normal pension age of 65 means post-1997 compensation is multiplied by 0.786 and non-increasing pre-1997 compensation by 0.807.
If your old employer's scheme is now with the Pension Protection Fund (PPF) and you are thinking of starting your compensation early, the amount will be smaller than at your normal pension age. How much smaller depends on your own dates and on the PPF's current tables. A PPF illustration covers one pension only. An FCA-authorised adviser can place it beside everything else you live on; to get that conversation going, use the form on this page.
How the PPF reduces compensation you take early
The PPF's member booklet Welcome to the PPF (PPF05 MAY 2026) says: "If you want, you can receive your payments earlier than your NPA. You have to be 55 years old or over to do this." (NPA is normal pension age.) The booklet gives two exceptions for starting before 55. One is a protected pension age, which depends on the rules of your former scheme and may be 50. The other is a terminal ill health lump sum, which you could be eligible for at any age if you have a serious, life-limiting medical condition. The booklet also warns that the Normal Minimum Pension Age is expected to rise from 55 to 57 on 6 April 2028; the guide to taking a pension at 55 covers that change.
On the reduction itself, the booklet says: "Because you’ll be receiving your payments early and therefore over a longer period, they’ll be reduced from what you would’ve received at your NPA." To see the effect, the booklet tells you to ask the PPF for an early retirement illustration. The PPF's member website also has a Quote and Retire service for members aged 55 or over.
The PPF also says that if you retired early, had not reached your scheme's normal pension age when your employer became insolvent, and your pension was neither a survivor's pension nor paid because of ill-health, you will generally be paid 90 per cent of what your pension was worth at that time. That is a separate rule about the starting amount, not the early retirement factor. For how the compensation level is set, read what the Pension Protection Fund pays.
Where the PPF publishes its early retirement factors
The factors sit on the PPF's Factors page (ppf.co.uk/trustees-advisers/Factors), which it addresses to pension professionals and which we read on 26 October 2026. It holds three sets of early retirement factors, each dated from 1 October 2025: periodic (whole-life) compensation, a lump sum that is a separate entitlement, and step-down pension. The page warns that the factors may change without notice, and says its tables now cover compensation affected by recent legislation allowing inflation increases on pensions built up before 6 April 1997.
On 1 July 2026 the PPF said: "We’ve reviewed our retirement factors and decided not to change them at this time, as financial conditions have broadly stayed the same." It will review them again next year. The same notice warns of a separate change for some members who have not yet retired: in April 2026 Parliament passed a law allowing inflation increases on PPF compensation and FAS assistance built up before 6 April 1997, where the former scheme allowed for mandatory increases. Its booklet When you retire (PPF08 JANUARY26) explains the usual timing: "Any changes normally take effect from 1 October and are reflected in any quotes issued from 1 July, for retirements on or after 1 October." It adds that changes may be made at other times of year if financial conditions change substantially, which is why "any figures we quote more than three months in advance, could go up or down between now and your retirement."
The table most members need is the one for periodic compensation, which the PPF prints by age at retirement and normal pension age (NPA). These rows come from its tables headed Early retirement factors – Revaluing Periodic Compensation, in Actuarial factors from 1 October 2025. Table 1 is for pre-1997 compensation that does not increase in payment. Table 2 is for post-1997 compensation and, from 31 December 2026, pre-1997 compensation that increases in payment.
| Age at retirement | NPA | Table 1 factor | Table 2 factor |
|---|---|---|---|
| 55 | 60 | 0.828 | 0.810 |
| 55 | 65 | 0.669 | 0.640 |
| 60 | 65 | 0.807 | 0.786 |
| 62 | 65 | 0.878 | 0.863 |
| 64 | 65 | 0.958 | 0.952 |
The notes count ages in complete years and months, rounded to the nearest whole month, with linear interpolation in between. From 31 December 2026 pre-1997 compensation will increase in payment for some members, and the pre-1997 factor used will depend on your circumstances.
Two other tables carry the same date but do not apply to an ordinary yearly pension. Early retirement factors – Revaluing lump sum is only for a lump sum that is a separate entitlement; it gives 0.9382 at five years before NPA. Early Retirement Factors – periodic step-down compensation gives one example: for "a member aged 55 now, with an NPA of 60 and a step-down pension payable from age 60 to age 66", the early retirement factor is 0.552.
A worked example, as the PPF prints it
In its October 2025 factor changes explained sheet, the PPF gives an illustration of a member it calls John, who would be 60 in October 2025 and is entitled to compensation from 65 but retires five years early. His compensation is £1,000 a year at 65, made up of £500 of pre-97 and £500 of post-97 compensation. The sheet states: "From the earlier quote (based on current factors), his compensation if he does not take a lump sum will be £829 p.a. If he were to wait until the new factors come into force, it would be £797 p.a."
The £829 used the factors in force on 30 September 2025; the £797 used the factors from 1 October 2025, which the PPF left unchanged on 1 July 2026. The periodic table above gives the same answer: £500 × 0.807 plus £500 × 0.786 comes to about £797. It is still an illustration, not a quote for you, and it predates the pre-1997 increases due from 31 December 2026. A rule of thumb is unsafe, because the PPF says the effect "will vary depending on, for example, how many years earlier you retire and the age you retire at". Its notice of 1 July 2025 also says early retirement under the new factors gave a lower yearly amount than the old ones, and that members who had fully retired were not affected.
Late retirement and commutation factors
Waiting has its own table. The booklet says you can put off receiving payments until the age of 75. After normal pension age, inflation increases stop and a late retirement factor is applied instead. The PPF's retirement FAQs add that no late retirement factor is applied after 75; you receive arrears instead, and retiring after 75 may affect your eligibility for a tax-free lump sum. You cannot delay if you are already receiving part of your entitlement.
The tax-free lump sum uses commutation factors. The PPF's Factors page sets out the lump sum payable for each £100 of compensation given up in its commutation factors table, dated from 1 October 2025. For the wider picture on lump sums, see the lump sum from a final salary pension and whether PPF compensation is taxable. Compensation cannot be moved elsewhere; can you transfer out of the PPF? explains.
What readers ask about PPF early retirement
When do the PPF factors change?
Any changes normally take effect from 1 October, with quotes on the new basis from 1 July, but the PPF can change them at other times if financial conditions change substantially. On 1 July 2026 it kept the October 2025 factors.
Do Financial Assistance Scheme members get the same factors?
The FAS is a different scheme, run by the PPF, set out in the Financial Assistance Scheme page. The PPF's notice of 1 July 2025 said FAS members were not affected by that change, but its 1 July 2026 notice says the pre-1997 increases law will affect retirements for some FAS members too.
Can I change my mind after choosing a date?
The PPF says you can change your mind about deferring and ask to take payments earlier or later than planned. It will provide a revised illustration for the new date.
Is taking compensation early a good idea for me?
The PPF's tables give a figure, not a view on whether it suits you. Whether that trade-off is worth it alongside your health and other income is something for an FCA-authorised adviser to explore when they ring you back from the form.
Sources: Pension Protection Fund, Factors (read 26 October 2026), Welcome to the PPF (PPF05 MAY 2026), Annual factors update (1 July 2026), Important changes for those considering retirement soon (1 July 2025), October 2025 factor changes explained, the periodic, lump sum and step-down early retirement tables, When you retire (PPF08 JANUARY26) and the retirement FAQs (read 26 October 2026).