What are the new developments on the cap on PPF compensation?

Last updated: 08 Jul 2020

There has been a development in the level of compensation provided by the Pension Protection Fund (PPF) that may affect members’ whose accrued pension rights exceeded the PPF cap on compensation.

In June 2018 the level of PPF compensation was challenged in the European Court of Justice (ECJ) in Hampshire v Board of the Pension Protection Fund. The landmark ruling determined that PPF compensation should be at least 50% of the value of members accrued pension. Under the existing rules the PPF cap on compensation meant that it was possible for members to receive compensation that was less than 50% of the pension they would have expected to receive from their previous scheme.

In June 2020 the High Court ruled on the case of Hughes v Board of the Pension Protection Fund. This case was brought as a result of the Hampshire judgement and the PPF plans to remedy the compensation levels to comply with the judgement. In this case, the High Court ruled that proposed remedy to Hampshire proposed by the PPF was inadequate. Additionally, a challenge was made that the compensation cap was discriminatory on the grounds of age.

We are awaiting to see if an appeal will be made to the Hughes judgement and for an update from the PPF on their plans to remedy compensation to comply with the Hampshire ECJ judgement.

You can read the PPF statement on the development here: https://www.ppf.co.uk/news/court-confirms-hampshire-methodology-permissible