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”.
“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.”
Opposition members are concerned when people’s pension protections are being not just watered down but, frankly, abolished.Stella Creasy, Labour partyThe 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.”
A PPF spokesperson said: “Legislation on PPF compensation, including the Hampshire and Bauer judgments, is ultimately a matter for DWP.
“We would like to reassure our members that the Retained EU Law Bill will only affect insolvencies that occur after the date that the majority of retained EU law expires, and that the PPF will continue to exist to protect current and future members."
The lifeboat stated it is currently implementing the Hampshire judgment for PPF and Financial Assistance Scheme members, and it continues "to work with DWP on an implementation approach to respond to the Bauer judgment".
“We anticipate confirming with the majority of members the level of increases due as a result of Hampshire or uncapping by the end of December 2022 and completing the calculations for remaining members in 2023.”
In October, the Employment Appeals Tribunal handed a near-complete victory to the DWP over a ruling that threatened limits paid to members of the PPF, having concluded that the majority of respondents no longer had rights against age discrimination that had been grounded in European law.
The DWP had appealed a January verdict by the Employment Tribunal, which concluded that an exemption in UK law regarding pensionable service before December 1 2006 was incompatible with an EU framework directive on discrimination.
Justice Eady upheld one ground of appeal submitted by the DWP with respect to all but two of the January claimants. Proceedings for these two pensioner members may continue.
The appeal was upheld on the basis that, aside from Mr Hampshire and Mr Farrell, whose claims may still be considered, the remaining claims were brought after the conclusion of the Brexit implementation period, which ended on December 31 2020.
BEIS has been contacted for comment.
Alex Janiaud is deputy editor of FTAdviser's sister publication, Pensions Expert
