Member States and employee benefits in case of insolvency
Jan 25 2007 - In accordance with a directive on the protection of workers in the event of the employer’s insolvency, the Member States are to ensure that the necessary measures are taken to protect the interests of employees and former employees in the event of the employer’s insolvency in respect of rights conferring on them immediate or prospective entitlement to old-age benefits under supplementary occupational pension schemes.
Ms Robins and 835 other claimants are former employees of the company ASW Limited, which went into liquidation in April 2003. They were members of final-salary pension schemes funded by ASW.
The schemes were terminated in July 2002 and are in the process of being wound up. According to actuarial valuations, there will be insufficient assets to cover all the benefits of all members, and the benefits of non-pensioners will therefore be reduced.
Under the legislation in force in the United Kingdom, the claimants will not receive all the benefits to which they were entitled. Two of the claimants will receive only 20% and 49% respectively of those benefits.
The Court finds that the directive does not oblige the Member States themselves to fund the rights to old-age benefits. Inasmuch as it states in a general manner that the Member States ‘shall ensure that the necessary measures are taken’, the directive leaves the Member States some latitude as to the means to be adopted to ensure protection. A Member State may therefore impose, for example, an obligation on employers to insure or provide for the setting up of a guarantee institution in respect of which it will lay down the detailed rules for funding, rather than provide for funding by the public authorities.
Furthermore, the Court considers that the directive cannot be interpreted as demanding a full guarantee of the rights in question. In so far as it does no more than prescribe in general terms the adoption of the measures necessary to ‘protect the interests’ of the persons concerned, the directive gives the Member States, in relation to the level of protection, considerable latitude which excludes an obligation to guarantee in full.
Source: "The Member States are not required to finance rights to old-age benefits under supplementary pension schemes themselves in the event of the employer’s insolvency", Europa, January 25, 2007