Hogan Lovells

Key Dates

Consultation paper and draft regulations issued on 3 July 2018.

Consultation response issued on 11 September 2018.

The Pension Protection Fund (Pensionable Service) and Occupational Pension Schemes (Investment and Disclosure) (Amendment and Modification) Regulations 2018/988 in force (in relation to PPF compensation) on 2 October 2018.


Summary

The DWP has issued a response to consultation on amending regulations concerning compensation from the Pension Protection Fund (PPF). The amendments were proposed in July 2018 to remedy the impact of the decision in Beaton v Board of the PPF in October 2017. The consultation response issued in September 2018 also takes account of the decision of the Court of Justice of the European Union (CJJEU) given on 6 September 2018 in Hampshire v Board of the PPF.

The final regulations also include provisions on pension scheme investment – for details please see the separate entry.

Background: decision in Beaton

In Beaton the judge held that a "relevant fixed pension", derived from a transfer in, was not attributable to "pensionable service" in the receiving scheme. It followed that, when assessing the level of the member's PPF compensation, the member's relevant fixed pension should not be aggregated with pension accrued in the receiving scheme when applying the PPF compensation cap.

Draft regulations

The draft regulations issued in July 2018 were intended to clarify that rights to a relevant fixed pension derived from a transfer in are to be treated as attributable to pensionable service in the receiving scheme – and so should be aggregated with pension rights accrued in that scheme when determining PPF compensation.

Hampshire v Board of the PPF

The CJEU held that EU insolvency law requires that every employee and former employee of an insolvent employer must be given protection of at least 50% of the value of their pension rights in the employer's occupational pension scheme. Under PPF compensation rules, some members – especially high earners, those with long service, or those with significant pre-1997 pensionable service – can receive PPF benefits of less than 50% of their entitlement under their scheme's rules.

September 2018 consultation response



Date Accessed: 28/05/2022