The Pensions Brief: May 2019

Issues affecting all schemes

Scheme amendments - retrospective validation

The Court of Appeal has upheld an appeal against a High Court decision that amendments made to a pension scheme to introduce higher pension increases were valid despite a failure to observe the correct formalities. The High Court had decided that the amendments, although not valid at the time, had been validated by replacement rules introduced in 1993. The Court of Appeal held that this involved the re-writing of history to an impermissible extent. The 1993 rules, which purported to take effect from 1990, did not provide for the higher pension increases, but included various provisions whereby the higher pension increases could have been introduced by agreement between the employer and the trustees without the need for signatures.

BIC UK Limited v Burgess and others [2019] EWCA Civ 806

Action

Trustees and employers should take care to ensure that scheme amendments are effective by following all the required formalities under the trust deed and rules and legislation.

Breach of statutory and trust law duties - trustee liability

The Pensions Ombudsman has directed two trustees to pay over £2 million to their scheme following actions on their part which amounted to breaches of their statutory investment duties and their trust law duties. The Ombudsman also held that the trustees' actions amounted to pure maladministration and ordered the trustees to pay £5,000 to each of the 14 complainants in recognition of the exceptional level of distress and inconvenience suffered by the complainants. The Ombudsman has submitted a copy of his determination to the Pensions Regulator so that the Regulator can consider whether to appoint an independent trustee to the scheme.

Mr L and others (PO-7292 and others)

Action

Trustees should ensure that they comply with their statutory and trust law duties and, if necessary, they should take professional advice on what those duties are and what they need to do to comply with them.

Distribution of death benefits - procedural failures

The Deputy Pensions Ombudsman has directed a scheme administrator to reconsider its decision on distribution of the death benefits payable under a member's pension policy after the administrator decided to pay the benefit to the member's partner rather than his widow (from whom he was separated). The Deputy Ombudsman concluded that the administrator had not made sufficient enquiries about the two women's respective...