P&O Ferries Loses Appeal

In an interesting case looking at how to interpret pension scheme documents, the Court of Appeal has confirmed that it will be very difficult to imply terms or restrictions into a pension scheme's power of amendment.

In the case of Stena Line Limited v Merchant Navy Ratings Pensions Fund Trustees Limited and Others [2011] EWCA Civ 543 , the Court of Appeal has upheld the High Court's initial decision and in doing has provided some useful guidance on how to interpret scheme documents.

In 2001 the MNRPF Scheme was amended so that the future funding obligations fell upon 40 active participating employers and not upon 240 other employers. At the same time a 'power of employer veto' in respect of funding contributions was also removed. In 2008, the trustees and the other employers decided to amend the Scheme again to reintroduce liability for the 240 former employers. The re-introduced employers argued that the veto on funding contributions should also be reintroduced as it was an implied restriction to the power of amendment. The original High Court decision concluded that the Scheme was validly amended in 2001 (removing the veto) and there was nothing in the Scheme that would stop it being amended again to re-introduce provisions requiring funding from all employers.

The Court of Appeal in agreeing with the High Court and rejecting the implied restriction argument looked at the broader position with respect to implied terms on the interpretation of clauses in pension schemes.

Of relevance to the wider pensions world, the Court included that:

Clauses in pension documents need to be interpreted in the context of the time that they were introduced (i.e. look at the prevailing legislation and practice at the time). This means that the same clause or wording can have a different interpretation it is reintroduced at a later date. Implied terms should not change the agreement of the parties. If the document itself is fairly...