Olympic Airlines – PPF entry rules amended

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In the Court of Appeal decision of Olympic Airlines SA Pension & Life Insurance Scheme v Olympic Airlines SA in June 2013, the court held that the sponsoring employer, Olympic Airlines SA, had not experienced an insolvency event for the purposes of section 121 of the Pensions Act 2004 and therefore the scheme was not eligible to enter the Pension Protection Fund (PPF).

Consequently, the government decided to review the rules on entry into the PPF and amendments are now being made to the Pension Protection Fund (Entry Rules) Regulations 2005 to hopefully ensure the Olympic scheme will now be able to transfer to the PPF following its insolvency event.

The amendments will apply only until 2017. The changes in legislation will create a new type of insolvency event under section 121(5) of the Pensions Act 2004 known as a “European insolvency event” and will be triggered if:

  • the scheme’s sponsoring employer was, on 20 July 2014, subject to insolvency action in a European Economic Area (EEA) state other than the UK;
  • the scheme employer has its main centre of interests in that EEA state;
  • a winding-up order in respect of the scheme employer was granted by a UK court, but was set aside due to lack of jurisdiction to wind up a non-UK Company; and
  • a PPF assessment period under normal circumstances would be triggered, were it not for the winding-up order being set aside due to the lack of jurisdiction.

Following the Court of Appeal decision, the trustees of the Olympic scheme have been granted permission to appeal to the Supreme Court. Given the above amendments to the relevant legislation, we assume they will now look to take advantage of this legislation rather than proceeding with the appeal in the Supreme Court. However, this point has not been confirmed at the time of writing this article.