Issues affecting all schemes

Parliamentary pension promises

Following the general election on 12 December 2019, the Conservatives have been voted into Parliament. In the Conservatives' manifesto, which was followed by the Queen's Speech on 19 December, the Conservatives made the following promises in respect of pensions:

  • to maintain the state pension "triple lock";
  • to conduct a comprehensive review of the tax loophole that adversely affects those in net pay arrangements;
  • to conduct an urgent review of the tapered annual allowance issue affecting the NHS Pension Scheme;
  • to "unlock" long-term capital in pension schemes to invest in and commercialise the UK's scientific discoveries; and
  • to reintroduce the Pension Schemes Bill 2019/20 which covers areas such as the framework for the pensions dashboard, introducing a new style of pension scheme (the collective defined contribution scheme) and new Pensions Regulator powers.


No action. We will report on developments as and when relevant.

Issues affecting DB schemes

PPF not required to guarantee full pension scheme benefits

On 19 December 2019, the European Court of Justice ("ECJ") ruled that the Pension Protection Fund ("PPF") does not have to guarantee full pension scheme benefits on an employer's insolvency.

In the case of PSV v Gunther Bauer, a member of a work pension scheme sued the German equivalent of the PPF. This case considered whether the equivalent PPF body was required to guarantee an employee's full pension benefits following an employer's insolvency. In its judgment, the ECJ held that:

  • a member state is not required to guarantee an employee's pension benefits in full on an employer's insolvency; BUT
  • a member state is required to guarantee at least 50% of an employee's pension benefits on an employer's insolvency. In addition, no reduction applied may be manifestly disproportionate. This effectively means that no reduction can result in an employee being below the "at risk of poverty" threshold in the member state.

The PPF has announced that it will be working through this judgment with the Department for Work and Pensions.


No action.

Final PPF Levy Determination 2020/21 published

On 16 December 2019, following the PPF's consultation, which was launched in September, the PPF announced that it has issued its final rules and guidance for the 2020/21 levy year.

Key points to note are:

  • the total levy the PPF intends to collect is £620m;
  • the 2020/21 levy year is the last year in the current three year period so there are very limited changes to the levy rules this year and the rules are broadly the same as set out in the PPF's consultation;
  • if a scheme's levy is significantly impacted by the guaranteed minimum pension ("GMP") equalisation adjustment, employers can apply to the PPF to request an adjustment if certain conditions are met. For example, if the GMP equalisation adjustment causes the employer to report a pre-tax loss rather than profit in its accounts.

The PPF has also published updated guidance on Type A contingent assets, including on guarantor strength reports.


Trustees should familiarise themselves with the PPF levy rules and guidance.

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This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.