UK - The future of the PPF remained uncertain after the European Court of Justice ruled UK legislation did not ensure the protection of pensions was provided for by the Insolvency Directive.
It is now up to the UK High Court to establish the level of compensation the UK government, and potentially the PPF, could be required to pay. The much awaited ruling by the ECJ, regarding the lost pension savings of the former Allied Steel and Wire (ASW) employees, still leaves the possibility of full compensation of lost pension benefits hanging in the balance.
Alexander Forbes Financial Services actuarial director Colin Mouqué said the PPF's future also remained uncertain in light of the ECJ judgement, as the UK High Court could still rule the fund must make the full payment to the workers.
"This could be a terrible blow for the PPF," he said. "If the High Court orders full compensation, the PPF will be bust within two years.”
Although the ECJ ruled the protection being offered by the UK government was inadequate, a PPF spokesperson claimed it was referring to the Financial Assistance Scheme.
This was a protection system used prior to the PPF being set up and according to the ruling, saw benefits of between 20% and 49% being covered. Since the PPF is not retrospective, it only covers the workers affected from April 2005 onwards.
In reaction to the ruling the PPF said it “generally meets the requirements of the solvency directive to adequately protect scheme members whose employers have gone out of business.”
However the fund was aware that referral to the High Court will draw out the legal process and could lead to further rulings and appeals.
Amicus and Community, the unions that took the case up to the ECJ, expressed high hopes the UK High court would rule in their favour.
Amicus general secretary Derek Simpson said: “We are confident that when this case returns to the UK High Court, our arguments will be upheld and our members who lost all or substantial parts of their pensions will be fully reimbursed.”
Liberal Democrat shadow work and pensions secretary, David Laws claimed the government should consider extending the PPF benefits to cover those who lost their pensions before the fund was set up.
“Those people who lost their pensions before the Pension Protection Fund was established are being grotesquely short changed by the Government – and this ruling gives some hope that they may get a better deal,” Laws said.
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