Pensions  

Labour MPs table amendment to preserve EU PPF protections

Labour MPs table amendment to preserve EU PPF protections
 

Labour MPs have tabled an amendment to a bill aimed at revoking residual EU law, seeking to retain judgments linked to the Pension Protection Fund.

In November, Labour MPs including Justin Madders and Stella Creasy tabled an amendment to the retained EU law (revocation and reform) bill. 

At the bill’s fourth reading on November 22, Nus Ghani, minister of state at the Department for Business, Energy and Industrial Strategy, confirmed that the Department for Work and Pensions “does not intend to implement the Bauer judgment through the benefits system, as it is a European Court judgment that does not fully align to the UK private pension protection scheme”.

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“The Hampshire judgment is a clear example of where an EU judgment conflicts with the UK government’s policies,” she continued.

“Removing the effects of the judgment will help to restore the system to the way it was intended to be.”

The Bauer ruling, handed down by the European Court of Justice in 2019, held that lifeboat funds such as the PPF must ensure that ex-employees of insolvent companies do not fall below the poverty line when their company pension fails. 

The Hampshire case ruling from the Court of Justice of the European Union, which was handed down in September 2018, determined that PPF members should not receive less than 50 per cent of their entitled benefits in the event of the insolvency of their employer.

‘A lower level of compensation’

The government is seeking to replace around 4,000 pieces of legislation that originated from the EU. With their amendment, Labour MPs want to ensure that parliament is able to approve replacement legislation and retain the Bauer and Hampshire judgments.

On November 22, Creasy told MPs that while the PPF would not disappear should the Bauer and Hampshire judgments be terminated, “if we delete the relevant legislation and do not replace it, that organisation will start to query what it can do to help our constituents. That may mean that they end up with a lower level of compensation”.

Madders, meanwhile, emphasised the importance of “proper scrutiny safeguards, and why we want to see certain pieces of legislation exited from the bill so that they are not lost. Pension protection is an important issue”.

“Opposition members are concerned when people’s pension protections are being not just watered down but, frankly, abolished,” Creasy told the November 24 debate. 

“It is curious that opposition members say they do not want to prevent Brexit or accept the supremacy of EU law, but then they come up with every which way to stop these things actually being delivered,” Ghani replied. She added that ministers in each department would be responsible for their own elements of the bill.

PPF continues to implement judgements

A DWP spokesperson said: “We are considering how best to seamlessly implement the measures in the retained EU law bill, and its impact on EU case law, while minimising the impact on the pensions industry and members of occupational pension schemes.”