A long-promised benefit for members of failed pension schemes who have had their incomes capped will be introduced next year, the Government has said.
The “long service” cap, which adds 3pc to the income of some pensioners whose income was capped under the rules of the Pension Protection Fund, was introduced in 2014 as part of the Pensions Act.
However, it has not yet been brought into force, leaving many pensioners thousands of pounds out of pocket.
Richard Harrington, under-secretary of state for pensions, has launched an eight-week consultation over the new law, and said he expects it to be brought in next April.
The cap affects pensioners whose schemes have entered the Pension Protection Fund, which provides compensation to members of defined benefit schemes which have collapsed.
The long service rules allocate pensioners an extra 3pc of income for each year over 20 years that they worked for their company, up to a limit of twice the level they would otherwise have been capped at.
Under the rules of the PPF, anyone under the scheme’s retirement age received 90pc of their income on retirement, subject to a cap, which is currently at £37,420.42 for 65-year-olds.
Telegraph Money brought attention to the delay earlier this year. Peter Farrell, a retired accountant, was one of a group of pensioners who went to see then-Pensions Minister Ros Altmann in February to ask about the cap.
At that stage Baroness Altmann said there was as-yet no date for the introduction of the policy.
Mr Farrell said: “It’s about time, but why the further delay? It’s taken all this time to put into place, and this is affecting pensioners, so many people have died while we’ve been waiting.”
Mr Farrell estimates that he would receive another 15pc of his £20,000 annual income were the long service rules in place, which would be around £3,000 a year.
Following the announcement Baroness Altmann said on Twitter that the cap should be introduced straight away, adding: “Waiting til next April is too long. Some people will die before getting their money.”