In 2018, the Court of Justice of the European Union (ECJ or CJEU) ruled that individual members of pension schemes should receive at least 50 per cent of the value of their accrued pension benefits in the event of employer insolvency.

Our plans to pay increases to members that are affected by the ruling are ongoing. New court proceedings have started against us, seeking to challenge, among other things, our intended approach for calculating any increases due to our members as a result of the ruling.

At the request of the claimants, the High Court has decided to postpone the hearing which was originally scheduled for 11-13 June. We don’t yet know when the hearing will take place. We wanted to proceed with the hearing to avoid delays in payments to our members.

While we’ll continue to assess and process increases to those members affected by the Hampshire ruling, we will not pay arrears until we have the court’s decision.

This is because we believe it would be wrong to risk having to recover overpayments if the court decides we must take a different approach.

Click on the relevant questions below to find out more about the ruling and what it means for you.

 

General

How are you calculating the increase?

Who has started to receive increased compensation so far?

Are there other members who might still be due an increase?

What are these other factors?

I’ve heard there is another case at the CJEU, PSV v Gunther Bauer. Will this affect the amount of compensation you pay?

 

I think I’m in this new phase…

Are you prioritising certain groups of members within this remaining phase?

When will I hear from you?

What will you ask me to send to you?

Why are you asking me to send you information, rather than my former scheme?

How long will it take you to assess whether I’m entitled to an increase?

If you assess that I’m due an increase, when do you expect to start paying it?

Will my increased payments include arrears?

Will there be any time limit on arrears?

I’ve already sent you information about my former scheme benefits, when you were assessing capped members. Will I have to send you this again?

I’m not affected by the cap and you’ve not written to me about this issue before, although I think I’m due an increase in this phase. Will you write to me asking me for additional information?

If I’m due an increase, can I take some of it as a tax-free lump sum?

I’m due to retire soon. Can I have a new illustration, to show what I would receive following any increase I might be due?

I’m deferred and won’t be retiring for some time. Will I be affected by the Hampshire ruling, and if so will I be informed of any change in my benefits?

If I die before my increase is paid, will the arrears be paid to my estate?

Will the court case challenging the way you are calculating the increases affect my payments?

 

I’m in one of the earlier phases

You’ve started paying me my increased compensation, but I’ve not yet received arrears. When will I get them?v

When arrears are paid, will they be taxed?

Will there be any time limit on arrears?

You wrote to me and told me I’m eligible for an increase, but I’ve not received it. When will I be paid?

You wrote to me and told me that I’m not due an increase. Will my case be reconsidered in this new phase?

I should have been considered in an earlier phase, but I didn’t hear from you. What can I do?

Will the court case challenging the way you are calculating the increases affect my payments?

 

General

How are you calculating the increase?

We’re running a one-off valuation exercise to determine if the total actuarial value of your original scheme benefits is more than 50 per cent of your compensation. If it is, you’ll then receive an increase.

 

Who has started to receive increased compensation so far?

We’ve started increased payments to all pensioners affected by the PPF compensation cap – either the standard assistance cap, or the long service cap – who’ve sent us the information we asked for.

 

Are there other members who might still be due an increase?

Yes. We’re now looking at pensioners for whom the effect of the cap alone didn’t take them below the 50% minimum but, when this is combined with other factors, do fall below the threshold.

Finally, there are those members who weren’t subject to the cap but whose benefits were significantly affected because of these other factors.

What are these other factors?

The other factors include:

  • If the annual increases a member would have received under their former scheme would have been significantly more than the annual increases which apply under the PPF
  • Differences between their former scheme’s benefit structure and the PPF’s benefit structure, eg spouse’s benefits

 

I’ve heard there is another case at the CJEU, PSV v Gunther Bauer. Will this affect the amount of compensation you pay?

The recent ECJ judgment in the case of PSV v Gunther Bauer has restated that, as a minimum, every individual must receive at least 50% of their accrued benefits. 

We consider that the implementation methodology we announced following the ECJ’s judgment in Hampshire, which will make sure that all our members receive at least 50% of the value of their accrued benefits, meets this requirement. 

There are other details of the judgment that we’re working through with the Department for Work and Pensions.  In the meantime, we’ll continue to make payments in line with the existing levels, and to assess and increase payment to those members affected by the Hampshire ruling.

 

I think I’m in this new phase…

Are you prioritising certain groups of members within this remaining phase?

We’re starting with pensioners for whom the effect of the cap alone didn’t take them below the 50% minimum, but when this is combined with other factors, do fall below the threshold.

We’re also gathering the information we need for the remainder of members, who have not been capped but are affected only because of other factors.

 

When will I hear from you?

If you’ve already sent us your latest benefit statement from your former scheme, you’ll hear from us when we confirm whether you are entitled to an increase.

If you haven’t sent us any information previously, and we think you are in the group of pensioners for whom the effect of the cap alone didn’t take you below the 50% minimum but, when this is combined with other factors, you do fall below the threshold, we’ll aim to write to you in October 2019 to ask you to send us additional information.

If we think you’re in the group of members who are affected only because of other factors, we may not write to you at all until we have completed your calculations. This is because we expect we will have collected sufficient data to be able to make these calculations.

 

What will you ask me to send to you?

We’ll ask you to send us your last benefit statement from your former scheme and your scheme booklet, if you have it.  

We’ll also ask you to let us know if you have any fixed transfers-in.

 

Why are you asking me to send you information, rather than my former scheme?

Although we hold the information we need to calculate our members’ benefits under existing legislation, we need further information to be able to calculate the 50 per cent minimum in individual cases.

This means we have to gather what we need from various sources, including contacting members to see if they have information which could potentially help us.

For members whose schemes wound-up or transferred to us some time ago, it’s likely that the members themselves may be able to give us the information we need faster; in particular where scheme documents have been archived.

We’re grateful to members who have helped us with this task so far.

 

How long will it take you to assess whether I’m entitled to an increase?

We hope to be able to have assessed and started making payments early in the New Year, but we expect it will take some time before we are able to process all the necessary increases.

 

If you assess that I’m due an increase, when do you expect to start paying it?

We hope to start making payments early in the New Year, but we expect it will take some time before we are able to process everyone’s increases.

 

Will my increased payments include arrears?

We’ve decided not to pay arrears – including tax-free cash – until the court has ruled on our approach for calculating any increases due to our members.

This is because we believe it would be wrong to risk having to recover overpayments if the court decides we must take a different approach.

If the challenge is successful it could mean that the increase we’ve calculated for members is too high.  This is because our methodology is more ‘front loaded’ than some alternative approaches, meaning that we pay a higher increase at the start and less later.  

If the methodology we’re using is found to be unlawful then the starting level of your PPF compensation may need to be lower, and we would need to adjust payments and recover overpayments.  

This is why our approach is not to pay arrears until we get clarity from the courts, in order to minimise any potential overpayment.  

Unfortunately we don’t know when the court hearing of the challenge to our methodology will take place.

 

Will there be any time limit on arrears?

The time period in relation to which we pay arrears – including tax-free cash –  may be affected by time limits under the Limitation Act and it’s also one of the matters being considered in the new court case.  

We don’t know yet when the hearing will take place, and we may not receive the ruling for some time after the hearing.

 

I’ve already sent you information about my former scheme benefits, when you were assessing capped members. Will I have to send you this again?

No, you won’t need to resend this information.

 

I’m not affected by the cap and you’ve not written to me about this issue before, although I think I’m due an increase in this phase. Will you write to me asking me for additional information?

If you’re in the group of members who are affected only because of other factors, we may not write to you at all until we have completed your calculations. This is because we expect we will have collected sufficient data to be able to make these calculations.

 

If I’m due an increase, can I take some of it as a tax-free lump sum?

This depends on when or if you retired:

1. If you retired before your employer became insolvent, you will have had the opportunity to take up to 25 per cent of your full scheme pension as tax free cash. This means that there is no additional cash available for you to take as a tax-free lump sum.

2. If you retired after your employer became insolvent, but before your benefits have been increased in accordance with the ECJ ruling, our approach will depend on whether your compensation was capped:

  • If your compensation was capped, you’ll be given the option to take a tax-free lump sum based on the increase.  We’ll delay payment of the lump sum to avoid the risk of us having to reclaim any overpayments that may be needed once the court case ends. However, if we decide to apply a time limit under the Limitation Act, members affected by limitation will not be able to take a tax-free lump sum.  Our ability to apply a time limit is one of the matters being considered in the court case.
  • If your compensation was uncapped, you won’t have the option to take a tax-free lump sum based on the increase.  This is because we expect that the increase for most uncapped members is likely to be small, and so it would be administratively disproportionate to offer uncapped members this option.

3. If you have not yet retired, we’ll send you details of your options when you decide you want to retire.

 

I’m due to retire soon. Can I have a new illustration, to show what I would receive following any increase I might be due?

Any retirement illustrations we give you will be based on your benefits before the CJEU increase has been applied.

We’re looking on a case-by-case basis at members who are approaching retirement and are likely to be affected, to see if any adjustment is necessary.

This may mean that we ask you for additional information.

 

I’m deferred and won’t be retiring for some time. Will I be affected by the Hampshire ruling, and if so will I be informed of any change in my benefits?

If we think you’re affected by the ruling, we’ll write to you nearer to your retirement if we need more information to carry out our checks. You don’t need to contact us.    

Because the Hampshire ruling is about how much we must pay you when you retire, we can’t accurately calculate this a long way before you retire as we won’t know how much your PPF benefit might increase, nor what level the PPF compensation cap will be. So if you ask us for a retirement illustration before we contact you, the illustration we give you will be based on your benefits before the CJEU increase has been applied.

Once you’re closer to retiring, we’ll be able to make sure you’ll be receiving at least 50% of the value of your former scheme benefit on retirement.

 

If I die before my increase is paid, will the arrears be paid to my estate?

Yes, any member who would have been eligible for an increase to their compensation but has passed away, will still be eligible to receive the arrears due up to the date of death.

In addition, any survivors receiving compensation following the member’s death will receive an increase to their payments.

As we’re currently involved with court proceedings, which are examining the way we’re calculating increases, we’re not yet able to pay any arrears.

We believe it would be wrong to risk having to recover overpayments should the court decide that we must take a different approach.

As soon as we can, we’ll write to confirm the amount of arrears due. Interest will continue to accrue on any arrears that may become payable.

 

Will the court case challenging the way you are calculating the increases affect my payments?

That will depend on what the court decides.

While waiting for the court’s decision, we’re continuing to assess and make increased payments to affected members.

We’ve decided to hold back payments of arrears though, to avoid having to recover overpayments should the court decide that we must take a different approach.

If the court finds that we’ve overpaid compensation to our members, we can then recover overpayments from these arrears.  

We’ll do our best to pay the correct level of arrears as soon as we can.

 

I’m in one of the earlier phases…

You’ve started paying me my increased compensation, but I’ve not yet received arrears. When will I get them?

We’ve decided not to pay arrears until the court has ruled on our approach for calculating any increases due to our members.

This is because we believe it would be wrong to risk having to recover overpayments if the court decides we must take a different approach.

If the challenge is successful it could mean that the increase we’ve calculated for members is too high.  This is because our methodology is more ‘front loaded’ than some alternative approaches, meaning that we pay a higher uplift at the start and less later.  

If the methodology we’re using is found to be unlawful then the starting level of your PPF compensation may need to be lower, and we would need to adjust payments and recover overpayments.  

This is why our approach is not to pay arrears until we get clarity from the courts, in order to minimise any potential overpayment.

We don’t yet know when the court hearing will take place. At the request of the claimants, the High Court has decided to postpone the hearing until after the ECJ’s judgment in the PSV v Gunther Bauer case is received.

 

When arrears are paid, will they be taxed?

When we pay your arrears we’ll write to let you know how they’ll be taxed.

 

Will there be any time limit on arrears?

The time period in relation to which we pay arrears (including tax-free cash) may be affected by time limits under the Limitation Act and it’s also one of the matters being considered in the new court case.  

We don’t know yet when the hearing will take place, and we may not receive the judgment for some time after the hearing.

 

You wrote to me and told me I’m eligible for an increase, but I’ve not received it. When will I be paid?

If you’ve sent us the information we asked for but haven’t been paid your increase, please contact us.

If you’ve not yet replied to our request for information, we can’t calculate your increased payment. When we receive your response, we’ll calculate your increase and pay it from the next payment date.

 

You wrote to me and told me that I’m not due an increase. Will my case be reconsidered in this new phase?

Yes. We’re now looking at pensioners for whom the effect of the cap alone didn’t take them below the 50% minimum, but when this is combined with other factors, do fall below the threshold.

 

I should have been considered in an earlier phase, but I didn’t hear from you. What can I do?

We believe we’ve contacted all capped pensioners. If you’re capped, but haven’t heard from us, please get in touch.

 

Will the court case challenging the way you are calculating the increases affect my payments?

That will depend on what the court decides.

While waiting for the court’s decision, we’re continuing to assess and make increased payments to affected members.

We’ve decided to hold back payments of arrears though, to avoid having to recover overpayments should the court decide that we must take a different approach.

If the court finds that we’ve overpaid compensation to our members, we can then recover overpayments from these arrears.  

We’ll do our best to pay the correct level of arrears as soon as we can.

 

The latest updates on the CJEU ruling

The court case and our plans to pay increases to members that are affected by the CJEU ruling are ongoing.

You'll find regular updates about the progress we are making in our latest news section.