Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Fraud compensation fund definition

What does Fraud compensation fund mean? A statutory UK fund that reimburses occupational pension schemes for losses caused by fraud or dishonesty. Established by the Pensions Act 2004 and administered by the Pension Protection Fund (PPF), it is financed by a Fraud Compensation Levy on occupational schemes. It compensates schemes (not individual members) where assets have been reduced by offences such as theft, fraud or dishonest breach of trust committed on or after 6 April 1997. In practice, trustees apply to the PPF after taking reasonable steps to recover losses (including from wrongdoers and insurance). If eligibility conditions are met, the fund can...

Occupational pensions fraud compensation: eligibility, recoveries, Pensions Ombudsman interaction and levy funding of the Fraud Compensation Fund, claims mechanics and post-Dalriada treatment of pension liberation schemes

Published by a LexisNexis Pensions expert

Practice notes

The fraud compensation fund (FCF) was set up as a statutory fund under section 188 of the Pensions Act 2004 (PeA 2004) to provide compensation to trustees or scheme managers of occupational pension schemes where a scheme’s assets have been reduced due to an act or omission amounting to an offence of dishonesty. The FCF is administered by the Board of the pension protection fund (ppf), which was created under PeA 2004, s 107. For details on the PPF’s general operations, see Practice Note: The Pension Protection Fund—an introduction.

The obligation to make fraud compensation payments

The PPF’s obligation to pay fraud compensation in respect of an occupational scheme arises under PeA 2004, Pt 2, Ch 4. The duty to make such payments is set out in PeA 2004, s 182. Under PeA 2004, s 182(1), the PPF must make one or more fraud compensation payments in relation to an occupational pension scheme if:

the scheme is not a prescribed scheme or a scheme of a prescribed description, eg a scheme with fewer than two members or a small self-administered scheme (SSAS)...

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Wyn Derbyshire

gunnercooke LLP

Wyn is a partner at gunnercooke LLP and specialises in pensions, trust and employment law in all industry sectors, dealing with the transactional, advisory and documentation aspects.He also has wide experience of the pensions implications of heavyweight corporate transactions and flotations, the issues arising from the establishment and merger of pension schemes, and sex equalisation and other discrimination issues in respect of benefits provided by pension schemes. In addition, he provides advice to pension scheme trustees generally.Recent transactions include advising Amcor on pension matters relating to the acquisition of Alcan business and the acquisition of Northern Foods PLC by Boparan Holdings.He is a co-author (with Stephen Hardy and Stephen Maffey) of TUPE: Law and Practice, published by Spiramus Press (now in its 4th edition), and co-author (with Stephen Hardy and David Wicks) of Money & Work, published by Spiramus Press in August 2007. He has also...

Web page updated on 21/05/2026

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