Implementing the European Court of Justice ruling

In September 2018 the Court of Justice of the European Union (the CJEU) ruled that pension scheme members should receive at least 50% of the value of their accrued old age benefits if their employer became insolvent.

Affected members

Although the vast majority of our members already receive more than 50% of the value of their accrued benefits, there will be a small number of members who are affected by this ruling.

We expect that the members who are receiving less than 50 per cent of their entitlement will mostly be those whose PPF compensation or FAS assistance is capped and/or those for whom there is a difference between the indexation/revaluation rates that they were due in their original scheme, and in the PPF/FAS. There may also be other differences between scheme and our benefit structures.

We expect that those affected by the judgment who have been capped will typically be affected to a greater extent than those where the difference arises from indexation/revaluation rates.

What we're doing

Although the ruling is clear that members should receive at least 50% of the value of their accrued old age benefits, it does not provide complete clarity on how that is to be achieved. Ultimately we expect government will implement the ruling by introducing legislation. It is also possible that there could be further court rulings.

However, this could take some time. The CJEU ruling has direct effect on us, so it's right for us to take action now. This article and document below offer a high-level explanation of our intended approach. It does not cover all the points of detail which still need to be worked out.

We are working with the Department of Work and Pensions (DWP) to try to ensure that the approach we take is not only legally correct, but is also likely to be consistent with future legislation.

We are adopting a phased approach focusing first on capped pensioners, the group most likely to be substantially affected.
In October 2018 we started to write to capped pensioners who we believe may be affected by the ruling. This was to complete our records.

Although we already hold the information we need to calculate PPF benefits and FAS assistance under the existing legislation, we do not retain all information about members’ original schemes, so we are likely to need further information to be able to apply the 50% principle in individual cases.

At the same time, we are developing the process for how we will increase payments for those affected. See the section below and the illustrative examples for more information.

We are also talking to trustees about how they should calculate and apply any increase to affected members of schemes in assessment.

Find out more...

If you are a member of the PPF or FAS, or if your scheme is in assessment, you can find out what information we need from you in our statement on implementing the European Court of Justice ruling.