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8th February 2007
The European Court of Justice (ECJ) has ruled that successive UK governments have failed to properly implement a European law that would have protected thousands of workers who have lost their pensions.
In the event of an employer going insolvent, the European Insolvency Directive, which came into effect in 1983, says that member states have to protect former and existing employees in terms of their entitlements under an occupational pension scheme.
In Robins and others v Secretary of State for Work and Pensions, the ECJ said that although member states do not have to fund the shortfalls themselves, they do have to set up a system to ensure that employees are protected. In this case, it said that the UK had failed to do that.
Ms Robins and 836 other claimants worked for ASW Limited, which went into liquidation in April 2003. They were all members of final-salary pension schemes funded by the company.
The schemes were terminated in July 2002, leaving the claimants with serious shortfalls - two of them were only entitled to 20 per cent and 49 per cent of the benefits. They decided to bring an action against the Government for compensation.
The ECJ agreed with the claimants (Amicus and Community members represented by Thompsons) that the UK had failed to correctly transpose the directive into national law and that a guarantee of benefits that came to less than half of the expected entitlement in some cases, did not fall within the definition of the word 'protect' used in the directive. The case could now be referred back to the UK High Court.