The "complex judgement" today issued on the Pensions-Sicherungs-Verein VVaG v Günther Bauer case has left many in the industry unsure of the consequences to UK law.

The ruling, published by the European Court of Justice (ECJ) today (19 December), initially caused some uncertainty as to the potential implications for UK pension schemes and the Pension Protection Fund (PPF).

It's statement suggested that the Pension Protection Fund (PPF), may have to pay 100 per cent of member benefits in cases of insolvency if it leaves members below the EU poverty line.

Pinsent Masons pensions partner, Alastair Meeks, explained the potential implications of this caveat in the ruling, stating: “Many in receipt of PPF compensation will have entitlements that are far below the at-risk-of-poverty threshold determined by Eurostat for the UK. The PPF will not have direct access to information about each individual’s total income levels.

“Many will argue the simplest way for the government to comply with this judgement would be to ensure that those in receipt of PPF compensation are entitled to a minimum income from the state that ensures that they are above the risk-of-poverty threshold. However, overhauling social security structures in this way could be challenging.”

Lincoln Pensions director, Alex Beecraft, added: “The detail of the judgement is still being worked through, but it could have significant ramifications for funding across the UK DB pensions landscape. It also remains to be seen how Brexit will impact its potential incorporation into UK law (or whether it is at all).

“Either way, it will take some time for the industry to have clarity on the future reach of EU requirements on funding levels and further challenges seem inevitable. Particular complexities may arise where you have a European parent with UK subsidiaries with a DB scheme.”

The ruling also states that "member states have considerable latitude in determining both the means and the level of protection of employees' accrued entitlement to old-age benefits”, and notes that this “cannot be interpreted as requiring a full guarantee of the rights in question".

PPF’s statement described the ruling as “a complex judgement”, though the body is expected to make further statements in due course.

Despite initial concerns that the judgement could mean significant financial obligations for the PPF, the full judgement was described as a “relief” for the lifeboat by LCP partner and head of pensions research, David Everett.

Everett stated: “It is not worth dwelling for too long on the now hypothetical potential implications of an ECJ decision endorsing the Advocate General’s opinion.

"But from a PPF financing perspective today’s result represents a relief in that PPF compensation may otherwise have needed to be substantially uplifted, potentially with retrospective effect, with all that this would have meant for the PPF’s solvency position and the demands that it would be making in future on levy payers.

"Now, if anything needs to happen to PPF compensation, it will be at the margin.”

This sentiment was echoed by Arc Pensions Law senior partner, Anna Rogers, who stated: “This looks like a change that will be hard to handle for the PPF, but the financial impact will be mitigated.”

Furthermore, Rogers stated that the ruling could be “something complicated to disentangle post-Brexit", with the potential implications of Brexit on the ruling another area prompting confusion.

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