On the go: The Pension Protection Fund has begun to top up the compensation of members receiving less than 50 per cent of their original pension promise, following a landmark ruling by the Court of Justice of the European Union.
The EU court determined in September 2018 that all defined benefit members should receive at least half of the value of their accrued old age benefits if their employer became insolvent.
In an update published on December 21, the PPF said its approach is to prioritise those affected most, first. It will compensate members in this order:
• Those impacted by the long-service cap.• Those impacted by the cap on overall benefits.• Everyone else.
In particular, it hopes to conclude paying compensation payments to people impacted by the long-service cap – an additional allowance for those who were members of their schemes for more than 20 years – by April 2019.
The vast majority of PPF and Financial Assistance Scheme members already receive more than 50 per cent of the value of their accrued benefits, but a small number of members are affected by the ECJ ruling.
The PPF is working with the Department of Work and Pensions to try to ensure the approach it takes is not only legally correct but is also likely to be consistent with future legislation.
“We’ve already written to those PPF and FAS members who are subject to the long-service cap and who we think are affected by the ruling asking them to supply certain information to us,” the lifeboat announced in its update. “We hope to start making payments in the new year, and expect to conclude by the end of April 2019 providing we have the necessary information to allow us to do this.”
Moving on to members affected by the cap, the PPF announced it would contact previous scheme administrators where possible and avoid contacting members unnecessarily.
“This group of members is likely to be more complex administratively to handle so will take longer to finalise,” the update added.
The PPF expects to conclude this phase in the summer of 2019. It is also looking on a case by case at members who are approaching retirement and are likely to be capped, to see if an adjustment is necessary.
