The ECJ is currently considering a case referred from the High Court brought by Grenville Hampshire against the board of the PPF, which has implications for high earners working at companies which go on to fail.

Hampshire saw his expected annual pension cut by 67% following the insolvency of manufacturer Turner & Newall, and the transfer of the plan to the PPF.

Now an assessment delivered to the ECJ by  advocate general Juliane Kokott states: ‘Article 8 of Directive 2008/94 is to be interpreted to the effect that every individual employee — subject to specific cases of abuse within the meaning of Article 12(a) of that directive — is entitled to compensation of at least 50% of the total value of his accrued rights or entitlements to old-age benefits in the event of the insolvency of his employer.’

Stephen Schofield, senior partner at law firm Pinsent Masons, said: ‘In the case under its consideration, the advocate general concluded the individual is entitled to compensation of at least 50% of the total value of his accrued rights.

‘This opinion tells us the cap is unlawful for high earners who were caught out by the cap.’

The ECJ will now consider the case. While it is not bound to follow the advocate general’s opinion, it does usually abide by this preliminary opinion.

A PPF spokesperson said: ‘We note the advocate general’s opinion and await the outcome of this case with close interest. Members are currently receiving benefits from the Turner and Newall scheme at the levels set out in the Pensions Act. They can be reassured that this is the minimum that they will continue to receive.’

Currently, only 500 of 250,000 members receiving PPF compensation are affected by the compensation cap. The ECJ is expected to publish its decision on the case within four months.

Opinion of advocate general Kokott

By Pat Sweet