In a judgment given on 25 January, the European Court of Justice has ruled in case C278-05 - Robins and Others v Secretary of State for Work and Pensions (2007) that the UK Government failed adequately to implement a European Insolvency Directive dating back to the 1980’s, which was designed to safeguard pension scheme members’ benefits in the event that their employers became insolvent. However, the ECJ also went on to rule that the United Kingdom Government need not necessarily fund the lost pension rights in full or in part.
The case has now been referred back to the UK High Court, which must decide whether the Government should be held accountable for the lost pension benefits beyond the levels of compensation available from the Financial Assistance Scheme. If the High Court finds that the Government ‘gravely and manifestly’ failed in its implementation of the pension protection measures required by the EU Directive, the Government could face a huge compensation bill, although the ECJ hints in its judgement that it will not be easy to establish the necessary culpability on the part of the Government.
Whatever decision is reached by the High Court, the UK will still need to decide how it will properly implement the requirements of the EU Directive in the light of the ECJ’s findings in the ASW case