European court to deliver landmark ruling on PPF benefits next month
The European Court of Justice (ECJ) will deliver its judgment next month in a landmark case on whether pension lifeboat funds are paying out the right level of benefits.
In Pensions-Sicherungs-Verein VVaG v Günther Bauer, the court has been asked to decide whether the German equivalent of the Pension Protection Fund (PPF) should be required to pay compensation equating to 100% of members' pre-insolvency entitlements.
The case will also likely impact the PPF as it relates to the application of the European Union's insolvency regulations.
Many members in the PPF are subject to a compensation cap, which limits their payouts from the lifeboat fund and strips away some pre-insolvency rights, including pre-1997 inflationary increases.
The court's advocate general, Gerard Hogan, in his official opinion on the case has agreed that Pensions-Sicheruings-Verein should be required to pay out 100% benefits - and, in most cases, the ECJ follows the official opinion.
The judgment is due to be delivered on 19 December.
It comes just 15 months after the ECJ said that PPF compensation was unlawful if it did not amount to at least 50% of a members' pre-insolvency benefits.
The PPF has been hard at work over the last year, and has increased payments to PPF and Financial Assistance Scheme (FAS) members affected by the long-service cap. Last month, the fund said it had begun increasing payments to all pensioners affected solely by the caps.
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