Who we are
The Fraud Compensation Fund (FCF) was set up by the Pensions Act 2004. We’re a statutory public corporation accountable to Parliament through the Secretary of State for the Department for Work and Pensions.
We’re run by the Board of the Pension Protection Fund (PPF) and funded by a levy on all eligible defined benefit and defined contribution schemes.
What we do
We work to ensure members who are victims of fraud in certain circumstances receive the appropriate compensation.
- We assess whether the legislation allows us to compensate a pension scheme.
- If we’re able to investigate a case, we collect evidence from records and individuals to assess whether there are reasonable grounds for believing that money was lost as a result of dishonesty.
- If a compensation application is successful, we pay compensation to scheme trustees or scheme managers.
How we're funded
All eligible pension schemes pay a levy. The Pensions Regulator (TPR) collect this on our behalf.
In 2021, the Department of Work and Pensions (DWP) gave us a loan to cover any shortfall that arises after we’ve collected the maximum levy available to us. This is so that we can pay eligible claims without unnecessary delay and meet the repayment schedule for the loan.
We currently collect the maximum level of levy, as set by DWP.
The difference between the FCF, PPF, FSCS and TPO
The Fraud Compensation Fund (FCF), The Pension Protection Fund (PPF), the Financial Services Compensation Scheme (FSCS) and The Pensions Ombudsman (TPO) all protect your pension savings if the worst were to happen. Each organisation provides scheme trustees or members of various types of UK pension schemes with varying levels of compensation for separate issues.
Broadly speaking:
- The FCF protects UK occupational (defined contribution and defined benefit) pension schemes and will pay your scheme compensation if the employer has become insolvent, and scheme assets have been reduced due to dishonesty.
- The PPF pays compensation if the UK defined benefit (DB) pension scheme employer fails and your UK DB pension scheme was unable to pay you at least what the PPF pays.
- The FSCS pays compensation if a UK-regulated insurer or UK-regulated investment provider fails or if you received bad advice concerning your pension from a UK-regulated adviser if the adviser has failed. More information is available on the FSCS website.
- TPO doesn’t pay compensation, but they have a Dishonesty Unit and can make directions regarding scheme redress and direct reimbursement if its assets have been reduced because of a breach of statute, trust or common law. More information is available on TPO’s website.