The British Airline Pilots Association has submitted an application for judicial review against the Pension Protection Fund (PPF) and the Department of Work and Pensions.

Later this year BALPA will go to court to argue that, when calculating compensation, the PPF should disapply the compensation cap that meant many Monarch and BMI pilots lost a large portion of their pension savings – in some cases more than 50% – when their companies were sold and their pensions went in to the Pension Protection Fund.

BALPA will claim the compensation cap is unlawful, particularly in light of the recent European Court of Justice judgement in the Hampshire case which ruled that no one should receive less than 50% of their expected pension.

BALPA will also challenge the PPF’s ‘one-off’ method for calculating any uplift and will call for an on- going mechanism for calculating compensation.

BALPA Head of industrial Relations, John Moore, said:

“The compensation cap is penalising people who saved hard for their futures. Many of our members lost up to half their savings, in some cases even more, when the companies they worked for were sold.

“That’s why BALPA has long campaigned against the compensation cap. We believe it is a blunt instrument which has never properly fulfilled its original ‘moral hazard’ purpose to stop fat cat executives from making irresponsible financial decisions in the knowledge their own pensions would be safe in the event of company insolvency.

“Instead the compensation cap has ruined the retirements of many pilots and other professional people who saved hard in to their company pension scheme but had no direct control over high-level corporate financial decisions.

“We look forward to taking this legal action forward and hope the result will be good news for a significant number of ex-BMI and an ex-Monarch members who are affected by the PPF compensation cap.”