A new influential opinion on the Pension Protection Fund (PPF) could result in increased payments for Prospect members.

The case of Grenville Hampshire v The Board of the Pension Protection Fund was heard at the Court of Justice of the European Union.

It challenged the level of compensation offered by the PPF, a “lifeboat” fund for pensioners whose defined benefit pension scheme failed because of their employer’s insolvency.

These include Prospect members who previously worked at Carillion and AEAT which was previously a part of the UK Atomic Energy Authority.

The claimants in the case argued that the compensation cap set for high-earners was too low. Many pensioners receiving compensation from the PPF are not entitled to inflationary increases because their entire pension was accrued before April 1997.

The Advocate General said that the cap and lack of indexation meant compensation could be too low for many thousands of people who are in the PPF.

Prospect national official David Luxton said: “At first glance this opinion seems like it could be very favourable for many Prospect members who have lost pension entitlement due to the insolvency of their employer and whose compensation from the Pension Protection Fund is very low. The cap has left many people facing hardship.

“Hopefully the court will endorse the minimum level of protection advised by the Advocate General so that pensioners who have already lost out significantly maintain a minimum level of compensation.”