Hogan Lovells

Key Dates

Judgment (C-17/17) given on 6 September 2018.


The Court of Justice of the European Union (CJEU) has upheld the opinion of the Advocate General that EU law requires Member States to ensure that, on an employer's insolvency, each employee and former employee receives at least 50% of the value of the benefits which would have been due from his/her occupational pension scheme.


Mr Hampshire was employed by his employer between 1971 and 1998 and was a member of his employer's occupational pension scheme throughout. He was made redundant in 1998, aged 51, and took an early retirement pension of £48,700 per year, with annual increases of at least 3%.

Following the insolvency of the employer's US parent company, the Pension Protection Fund (PPF) began an assessment of the employer's pension scheme in July 2006, when Mr Hampshire was aged 58. In 2011, the PPF approved a valuation of the scheme's assets and liabilities which showed that, as at July 2006, the scheme's assets exceeded the value of its PPF liabilities. Accordingly, the scheme did not enter the PPF but was to be wound up by its trustees, with priority given to securing members' PPF liabilities.

Mr Hampshire was subject to the PPF compensation cap, which was reduced to reflect his early retirement. As most of his accrual was before 6 April 1997, he also lost most of his rights to pension increases. After adjusting for his tax free lump sum taken on retirement, Mr Hampshire's pension was set at £19,800 per year, approximately 67% less than the £60,200 pension he would have then been entitled to under the scheme rules.


The case concerned the interpretation of Article 8 of Directive 2008/94/EC on the protection of employees in the event of their employer's insolvency. Article 8 requires protection of pension rights for employees and survivors under occupational pension schemes.

Mr Hampshire and 15 other employees of his employer initially complained to the PPF Ombudsman, challenging the valuation as at July 2006 which was approved by the PPF. The complaint was rejected.

Mr Hampshire's appeal to the High Court was dismissed, and he then appealed to the Court of Appeal. The PPF contended that Article 8 merely required that employees should receive at least 50% of the value of their accrued entitlement on average. The Court of Appeal stayed the proceedings and made a reference to the CJEU on this point and on whether Article 8 had direct effect.

The DWP was an interested party in the reference for a preliminary ruling. The CJEU dismissed the UK government's submission that the reference was inadmissible on account of the hypothetical nature of the questions referred, since Mr Hampshire's scheme had not entered the PPF. The CJEU's interpretation of Article 8 could result in a new valuation of the PPF liabilities and, therefore, of Mr Hampshire's pension entitlement – meaning that there was a sufficient link between the disputed issue in the main proceedings and the questions referred for a preliminary ruling.

CJEU's decisions

The CJEU ruled as follows.

Minimum level of guaranteed compensation

Direct effect of Article 8

Date Accessed: 28/05/2022