Hampshire v The Board of the Pension Protection Fund
2014
CHANCERY DIVISION
United Kingdom
CORAM
- HHJ DAVID COOKE
Areas of Law
- Employment Law
- Administrative Law
2014
CHANCERY DIVISION
United Kingdom
CORAM
AI Generated Summary
The case involved Mr. Hampshire's appeal against a decision by the Pensions Protection Fund Ombudsman, which dismissed his complaint regarding the pension compensation level set under the Pensions Act 2004. His employer's insolvency and the resultant cap on his pension led him to claim a breach of EU Directive 80/987/EEC. The court ruled that Article 8 of the Directive does not impose a precise obligation to ensure every employee receives at least 50% of their contractual benefits, rejecting the argument for the Directive's direct effect.
Judgment
HHJ David Cooke:
This hearing was listed to determine certain preliminary issues, directed by consent by Morgan J on 23 June 2014, in Mr. Hampshire's appeal against a decision of the Pensions Protection Fund Ombudsman dated 19 February 2014. Mr. Facenna and Mr. Bourke appeared for Mr. Hampshire, and Mr. Giffin QC for the Board. I am most grateful to all of them for their submissions and in particular the detailed explanation of the operation of the relevant legislation and the background to the case. I summarise that very shortly as follows.
By his decision the Ombudsman dismissed Mr. Hampshire's appeal against the decision of the Respondent ("the Board") to approve, pursuant to s 144 Pensions Act 2004 , a valuation of the assets and protected liabilities of the T&N Retirement Benefits Scheme (1989).
That scheme, which provides benefits for certain employees of the Turner & Newall group of companies, entered into what is referred to as an "assessment period" following the insolvency of the employers, in 2006. The Board is required to undertake a valuation to determine whether the assets of the scheme are sufficient to meet its protected liabilities, ie (broadly) the liabilities of the scheme on the basis that members' benefits are limited to the amount of compensation they would be paid by the Pension Protection Fund ("PPF") if the PPF took responsibility for the scheme (which I will refer to as the PPF compensation level).
If the valuation concludes that the assets are sufficient to meet the protected liabilities, the PPF does not assume responsibility for the scheme, which therefore continues to be administered by its trustees, but on the basis that, broadly, benefits at the PPF compensation level are prioritised over other benefits. If the assets are assessed to be insufficient, the PPF assumes responsibility for the scheme, its assets become vested in the PPF and the PPF becomes directly responsible for paying benefits to members at the PPF compensation level. Thus any shortfall in the assets falls on the PPF.
The valuation therefore depends critically on the level of compensation potentially payable to members by the PPF, which is prescribed by the 2004 Act and secondary legislation. Mr. Hampshire's objection is in substance to the level of compensation prescribed for cases such as his, and in particular that it is subject to a cap. The cap is fixed annually by statutory instrument but in 2006 was £24,487 for a person aged 58, as Mr. Ha