DWP and PPF launch appeals against High Court compensation cap ruling

The Pension Protection Fund (PPF) and Department for Work and Pensions (DWP) have launched appeals against aspects of the High Court judgment in the Hughes and others v The Board of the PPF case.

In June 2020, the High Court ruled that the PPF compensation cap was unlawful on the grounds of age discrimination and its approach of making a one-off compensation calculation needed to make sure the individual would receive at least 50 per cent of the benefits their scheme would have provided.

Additionally, it ruled that members of schemes in assessment should receive benefits at the level required by the European Court of Justice’s (ECJ) Hampshire judgment, which found it unlawful for PPF compensation to be less than 50 per cent of the benefits an individual built up before their employer became insolvent.

In response to the court's decision, the DWP, which is responsible for the compensation cap’s level and the legislation governing it, has lodged an appeal against the ruling that the cap is unlawful.

Alongside this, the PPF has lodged an appeal with the Court of Appeal on the approach it may adopt to meet the requirement for members to receive at least 50 per cent of their entitled benefits.

It is also appealing as to how survivors’ benefits should be dealt with.

The PPF stated that the minimum level compensation requirements mean that it would need to amend its methodology and is different to its view of what the Insolvency Directive requires.

The pensions lifeboat said that I has asked the Court of Appeal to deal with its request “as soon as possible” but that if the court does not agree to let it proceed with the appeal, “that will be the end of the case”.

“We’re continuing to work on our plans for how we could implement the June 2020 judgment, so that we’re in a position to do so if necessary as soon as possible after we know the appeal outcome,” noted the PPF.

It also asked the Court of Appeal if it can wait until the appeal process if completed before it makes any changes to payments that would be required under the June 2020 ruling, so that does not pay the wrong amount and possibly have to claim back overpayments from members.

The PPF will continue to withhold arrears payments for those it has already started paying increased benefits to as a result of the ECJ’s ruling, as the result of the appeal could mean its overpaid increases and may have to recover overpayments.

Additionally, until there if clarity over the DWP’s appeal, it will continue to apply the compensation cap according to the levels set by the government department.

A DWP spokesperson said: "We do not comment on live litigation."

    Share Story:

Recent Stories

A time for fixed income
Francesca Fabrizi discusses fixed income trends and opportunities with Goldman Sachs Asset Management Head of UK Pensions Solutions, Fixed Income Portfolio Management, Henry Hughes, in our Pensions Age video interview

Purposeful run-on
Laura Blows discusses purposeful run-on for DB schemes with Isio director, actuarial and consulting, Matt Brown, in Pensions Age’s latest video interview
Find out more about Purposeful Run On

Keeping on track
In the latest Pensions Age podcast, Sophie Smith talks to Pensions Dashboards Programme (PDP) principal, Chris Curry, about the latest pensions dashboards developments, and the work still needed to stay on track
Building investments in a DC world
In the latest Pensions Age podcast, Sophie Smith talks to USS Investment Management’s head of investment product management, Naomi Clark, about the USS’ DC investments and its journey into private markets