Pension Protection Fund 'falls short of EU standard'- Sunday Telegraph article 29 January 2006
30 January 2006
The Government is breaking EU laws designed to protect workers' pensions when their employers go bust, according to a European Commission report.
An independent study ordered by the commission into the Government's implementation of EU pension laws has found that "the Pension Protection Fund is not sufficient on its own to provide all the guarantees required by Article 8 of the [1980 pensions] directive."
Article 8 deals with protecting employees in the event of the insolvency of their employer. The PPF was established last year to pay limited compensation to workers who lose their pensions through employer insolvency after April 2005.
The EU's view on the inadequacy of the PPF came to light when Jim Allister QC, an MEP, received a complaint from a constituent who had lost his pension.
Allister told the constituent that "the decision whether Brussels presses action against the UK will depend on comparing what has happened in other member states."
The Government insists it has taken adequate steps to protect company pension schemes through the Pensions Acts of 1995 and 2004, new funding requirements for company schemes and the establishment of the PPF.
But the inadequacy of the PPF is already being exposed as the scheme's first claimants receive notification of the compensation they are likely to receive.
Compensation is capped at £25,000 a year for those who have reached age 65, but early retirers face cuts of up to 90 per cent.
Ros Altmann, the pensions expert, said: "If the European Court finds the Government at fault, it might be forced to compensate pension victims back to 1983, when the 1980 directive came into force, rather than from 2005 as is currently the case."
