Court of Appeal gives judgment in case concerning the Pension Protection Fund - Matrix Chambers
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Court of Appeal gives judgment in case concerning the Pension Protection Fund

Published:

Re: The Secretary of State for Work and Pensions -v- Hughes and ors [2021] EWCA Civ 1093

These two linked appeals are brought in relation to the Order of Lewis J (as he then was) (‘the judge’) dated 30 July 2020, allowing the claimants’ judicial review claim. The claim, brought by twenty-four individual claimants and the British Airline Pilots Association (“BALPA”), (together referred to as the “Claimants”) concerns the level of compensation paid by the Board of the Pension Protection Fund (the “PPF”) in lieu of old-age benefits payable under pension schemes sponsored by the employees’ former employers, which have since become insolvent.

The Claimants contend that: the provisions of Chapter 3 of the Pensions Act 2004 which impose a cap on the PPF compensation for those who have not attained their normal pension age at the date on which their respective schemes enter what is described as the assessment period, amounts to unlawful age discrimination; and that the method adopted by the PPF to ensure that they receive at least half of the value of their accrued entitlement under their respective schemes is incompatible with Article 8 of Directive 2008/94/EC on the protection of employees in the event of the insolvency of their employer.

 

Held: the court allows the Pension Protection Fund’s appeal on both grounds. The court refuses the Secretary of State’s permission to appeal on Grounds 1 and 2. Permission to appeal on ground 3 was granted but the appeal dismissed.

Where the Pension Protection Fund (PPF) had assumed responsibility for compensating pension scheme members in the event of their employer’s insolvency, Directive 2008/94 art.8 was to be interpreted as meaning that the employees had to receive compensation corresponding to at least 50% of their accrued entitlement under the original pension scheme, taking into account the envisaged growth in that entitlement over the entire pension period. The PPF was entitled to pay compensation to a deceased pensioner’s surviving spouse at 50% of what the pensioner would have received had they lived, irrespective of the survivors’ benefits prescribed in the original scheme.

 

Ms Zoe Leventhal was involved in this case.