Page last updated at 11:37 GMT, Wednesday, 22 October 2008 12:37 UK

Lehman pensioners to be rescued

Lehman Brothers UK staff packing up
Many Lehman scheme members are now under the wing of the PPF

Most of the UK final salary pension scheme of the insolvent Lehman Brothers investment bank has been taken on by the Pension Protection Fund (PPF).

The main section, with 2,400 members, will go through a formal winding up process lasting at least a year.

After that the PPF will pay the current and future pensions, if the Lehman scheme is sufficiently insolvent.

The PPF was set up in 2005 to bail out the pension schemes of insolvent firms and has rescued 61 schemes so far.

The bankruptcy in September of Lehman Brothers, a huge US investment bank, was a crucial moment in the rapidly unfolding international banking crisis.

The part of the scheme now under the wing of the PPF has 180 pensioners and 2,220 former employees who have yet to retire.

There are 29 members of the bank's pension scheme who are not affected by the PPF rescue because the parts of the Lehman business they work for have not been declared insolvent.

The remaining members of the scheme, just over 1,000, were contributing to its money-purchase section and therefore do not need to be bailed out.

Generally, the PPF pays out 100% of existing pension payments, for people who have reached their scheme's normal retirement age.

Members who have not yet retired, or who retired early, receive 90% of their pension once they reach retirement age.

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