PPF and overseas employers: new regulations fail to solve the problem
By Ian Greenstreet
We have previously reported on a gap in the coverage of the Pension Protection Fund (PPF) where a scheme that is eligible for PPF entry has an employer based overseas. Essentially the problem is that the list of ‘insolvency events’ suffered by an employer that are required in order to qualify a scheme for entry to the PPF does not include events occurring outside the UK. It may, in some circumstances, be possible for secondary UK insolvency events to be triggered that could allow a scheme PPF entry, but this will generally require the employer to have a trading presence in the UK. In many cases, the initial insolvency of the employer would have resulted in the effective closure of any UK establishments, making secondary insolvency proceedings unlikely to succeed. Meanwhile, these schemes remain technically ‘eligible’ for PPF entry and are required to pay the annual levy despite members having no effective protection.
This is exactly what happened in the case of Olympic Airlines. The employer, which had UK-based employees and a UK pension scheme, had entered liquidation in Greece. The attempt to instigate secondary insolvency proceedings was rejected by the Court of Appeal as by the time those proceedings were launched Olympic Airlines no longer carried on commercial operations in the UK…
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