Comment on the ECJ case of Grenville Hampshire v The Board of the PPF
Alex Hutton-Mills, MD, Lincoln Pensions, comments on the initial view from the Advocate General of the ECJ in the case of Grenville Hampshire v The Board of the Pension Protection Fund.
Alex added: “If it stands, this ruling could materially increase the size of the pension liabilities guaranteed by the PPF, and will present big questions over, firstly, how this should be funded and secondly the broader question of the fairness of the cap not applying to pensioners. Reducing the level of protection offered to pensioners and the benefits of lower earners could be politically unacceptable.
“If the PPF chooses to increase its annual levy on all defined benefit pension schemes, this would provide a stronger incentive for many sponsors to accelerate funding of their pension obligations. Finally, removing the benefit cap could also reduce the perverse incentives that PPF drift creates to avoid dealing with “zombie” schemes.”