The case, R (Hughes & Ors) v Board of the PPF [2020] EWHC 1598 (Admin), was brought by 25 claimants including the British Airline Pilots Association (BALPA) on behalf of pilots from BMI and Monarch Airlines, whose company pensions had been transferred to the PPF owing to insolvency or inability to meet pension liabilities.
The claimants challenged the PPF’s policy of capping payouts for those below pensionable age at the date of assessment to 90% of the benefits fixed by the scheme. PPF also imposed a ceiling on the total amount payable that varied with age (£41,461 for 65-year-olds and tapering down) and applied the 90% cap to that ceiling.
One of the claimants, Paul Hughes, retired at 57 on a pension of £66,245. Two years later, his former employer became insolvent and the PPF reduced his pension by 75% to £17,481. The claimants also pointed to the European Court of Justice ruling last year, in Hampshire v Board of the PPF (Case C-17/17), that a member state must guarantee that retirees receive at least 50% of their expected pension after the insolvency of their former employer.
Mr Justice Lewis, handing down judgment, held the claimants had been treated less favourably due to their age, ordered that the cap be disapplied and said the claimants could seek to recover arrears for a period of six years.
Kate Allass, partner, and Sally Mantell, associate, of Farrer & Co, who acted for BALPA, said: ‘The current position is that the PPF should have paid, and should still be paying, compensation equivalent to 90% of affected members’ annual pensions.’
Lewis J also confirmed the principle outlined in Hampshire. Allass and Mantell said: ‘This means that the system would need to ensure that the calculations can be adjusted if a member is in fact at risk of receiving less than 50%. The “one-off” initial calculation is unlawful to the extent that it results in members falling below this threshold.
‘In light of the decision, the PPF will now need to rework its methods of calculating compensation due to members to ensure it is in compliance with the law.
‘The decision has wide and significant implications for all employees whose pension schemes are transferred to the PPF on insolvency, not only those represented by Farrer & Co in this judicial review. The disapplication of the cap means that many are now in line to receive payments much closer to their contracted pension benefits. We await the PPF’s proposals regarding the implementation of this decision.’
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