The Pension Protection Fund (“PPF”) has statutory responsibility for the payment of compensation to members of occupational pension funds if their employers become insolvent.
The Court of Appeal has ruled in favour of the PPF, overturning the Judgment of Mr Justice Lewis (as he then was), in relation to the PPF’s statutory obligations under retained EU law when assessing compensation. Interpreting and applying a series of Judgments of the Court of Justice of the EU, the CA held that the PPF was entitled to calculate compensation by reference to a one-off actuarial valuation and through the substitution of payment rights, rather than having to ensure that over their lifetimes pensioners and their survivors cumulatively receive at least 50% of the sums that would have been paid under their private schemes. The financial effect of the CA’s Judgment is in excess of £1 billion.
The PPF’s appeal was heard together with an appeal by the Secretary of State against Mr Justice Lewis’ ruling in relation to the statutory cap on the compensation paid to higher earners. That appeal was dismissed.
The Judgment is here.
Jemima Stratford QC and James McClelland QC, instructed by Hogan Lovells, both appeared for the PPF before the Court of Appeal.