The Pension Protection Fund (PPF) compensation cap will be changed to reflect how long an employee has worked for a company, under Department for Work and Pensions (DWP) plans .
The DWP is consulting on changes to how much the pensions lifeboat pays out to members of stricken final salary schemes.
The PPF pays out to defined benefit scheme members whose employer has gone out of business leaving the pension underfunded.
For those already retired or older than the so-called normal retirement age (NRA), 100% of the benefit they were due to receive is paid by the PPF. Those under the NRA receive 90% up to a cap of £30,644.
A DWP spokesman said: 'We are consulting on changing the structure of the PPF cap in particular the feasibility of making the cap reflect the length of service of a member.’