EU laws: PPF will continue to pay at least 50% of pension

Pardon the Interruption

This article is just an example of the content available to mallowstreet members.

On average over 150 pieces of new content are published from across the industry per month on mallowstreet. Members get access to the latest developments, industry views and a range of in-depth research.

All the content on mallowstreet is accredited for CPD by the PMI and is available to trustees for free.

The government will keep the 2018 Hampshire judgment by the Court of Justice of the European Union which says members of the Pension Protection Fund must receive at least half of their original entitlement, while it plans to scrap hundreds of EU laws. The future of the 2019 Bauer judgment by the CJEU is unclear. 
The retained EU law (revocation and reform) bill will give government departments the right not to implement EU case law decided before 30 December 2020. 
However, a DWP spokesperson told mallowstreet that it will not scrap the requirement for the PPF to pay at least half of a member’s original entitlements. 
“The government continues to consider how best to address seamlessly the measures in the retained EU law (revocation and reform) bill, and their impact on the European Court judgments, whilst minimising the impact on the pension industry and members of occupational pension schemes. As part of these considerations, the government has decided to retain the effects of the Hampshire judgment beyond the sunset date,” the spokesperson said. 
The confirmation follows remarks by Lord James Younger of Leckie, the minister for Lords, who said during a Grand Committee debate last month that “the government intend to retain the Hampshire judgment beyond the sunset date". 
This marks a U-turn by the government. In a House of Commons committee debate last November, Nusrat Ghani, a minister in the Department for Business, Energy and Industrial Strategy, cited Hampshire as a law that should be scrapped.  
Ghani said: “The Hampshire judgment is a clear example of where an EU judgment conflicts with the United Kingdom government’s policies. Removing the effects of the judgment will help to restore the system to the way it was intended to be.” 
The judgment in Grenville Hampshire v PPF put in place a requirement on the lifeboat fund that members and their beneficiaries must receive at least half of the pension they would have received without any employer insolvency.  
What about Bauer? 
The future of another CJEU judgment about PPF benefits, the Bauer judgment, is less clear.  
Ghani said last November that “the Department for Work and Pensions does not intend to implement the Bauer judgment through the benefits system, as it is a European Court judgment that does not fully align to the UK private pension protection scheme”. 
The case of Günther Bauer [PSV v Bauer (Case C-168/18)] was first heard in Germany but later went to the European Court of Justice. The court ruled in late 2019, shortly before the UK’s exit from the EU, that a reduction to pensions can only be made by a lifeboat fund if the person is not left at risk of poverty, defined via a minimum income measure by Eurostat. 
Claire Dimmock, a professional support lawyer at law firm Squire Patton Boggs, said recently it was unlikely “that the DWP will have much appetite for making wholesale amendments to pensions law, even where it will have the authority to do so” given how many other things are in its in-tray, ranging from value for money to superfunds, dashboards and notifiable events. 
What do you expect will happen with the Bauer judgment? 

More from mallowstreet