On the go: Pensions minister Guy Opperman has sought to explain discrepancies in compensation payments between the Pension Protection Fund and the Financial Assistance Scheme arising from the Hampshire ruling, detailing that there is no legal basis for paying interest on arrears in the FAS.
Work and Pensions Committee chair Stephen Timms wrote to Opperman in late January questioning the disparate approach of the two entities to the ruling, which held that PPF members must receive at least 50 per cent of the value of their entitlement.
The High Court ruled that the compensation cap in place for the PPF was illegal on grounds of age discrimination, a verdict backed by the Court of Appeal in a judgment handed down in July 2021.
Though the FAS is administered by the PPF, the cap was only disapplied with respect to the the latter. The pensions lifeboat’s website explained that the reason the cap remains in place at the FAS is that the PPF operates “under different regulations to the FAS”.
Timms wrote: “The approach to paying arrears now due is different for members of the PPF and the FAS, which is taxpayer-funded and where [the Department for Work and Pensions] has more responsibility for decision-making.
“PPF members will receive uncapped arrears with interest paid and no time limit. FAS members will similarly receive arrears with no time limit, but no interest will be paid and a cap, not dissimilar to the one ruled unlawful for PPF members, remains in place.”
In response, Opperman said that both the PPF and the FAS have been “uplifting” compensation payments for members in scope of the Hampshire ruling, and began paying arrears once its methodology for calculating the uplift was settled by the Court of Appeal.
While the compensation cap was disapplied in the PPF, the FAS cap “was not the subject of legal action”, he said.
“The cap on financial assistance payments applies to all members and there is no differentiation on the grounds of age,” he explained.
The PPF is required by law to include interest on underpaid compensation. Although the decision to backdate the payment of arrears was also made with respect to the FAS, “there is no legal basis to pay interest on the arrears due to FAS members and so no interest is payable”, Opperman added.
