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Pensions: ECJ Ruling

Volume 688: debated on Friday 26 January 2007

My right honourable friend the Secretary of State for Work and Pensions (John Hutton) has made the following Written Ministerial Statement.

The European Court of Justice has yesterday given its ruling in the case brought by former employees of the Allied Steel and Wire company, who lost pension entitlements when the company became insolvent. We shall of course be studying the judgment of the Court carefully.

The Court considered whether UK legislation in place before the 2004 Pensions Act sufficiently implemented Article 8 of the Insolvency Directive. The UK’s position has always been that the directive does not oblige member states to ensure such pensions are guaranteed in full, nor does it require the taxpayer to underwrite them. The Court has supported the UK's view.

On the question of damages, we note that the Court appears to have given a steer that damages may not be payable. But this is now a matter for the High Court to decide. It would be inappropriate for us to comment further on the case at this stage.

We have every sympathy for those who have lost their pensions and understand the distress this has caused to them and their families. It is in recognition of this that we introduced not only the pension protection fund, but also the financial assistance scheme, which we recently extended substantially.