Independent Trustee Services Limited and another v Knell (High Court) – 31 March 2010


The High Court has ruled on the interpretation of a scheme’s rule amendment which sought to equalise benefits for men and women following Barber.

Background

In the Barber case, the ECJ concluded that pensions provided under an occupational pension scheme constitute “pay” for the purposes of Article 119 of the EC Treaty (now Article 157 of the Treaty on the Functioning of the European Union) and, as such, need to conform to the principle of equal treatment.

At the time, the majority of schemes had retirement ages of 60 for women and 65 for men, which resulted in unequal benefits in certain respects.  In the wake of Barber, schemes were required to equalise retirement ages from 17 May 1990 (the date of the judgment).  This could be done by increasing Normal Retirement Dates (NRDs) going forwards, but providing benefits on the more favourable basis for the period between the date of the Barber judgment to the date of a valid amendment to equalise benefits.  The period is known as the “Barber window”.

However, while it was clear from Barber that schemes needed to equalise benefits, it was not until two later cases had been decided that trustees and employers understood how to achieve this. In particular, Coloroll confirmed that benefits under occupational pension schemes only needed to accrue equally for men and women for service from the date of the Barber judgment onwards and not for all service.

Facts

Under the rules of the Hobourn Group Pension Scheme, NRD was age 65 for men and 60 for women.  The trustee sought to equalise NRDs at age 65 from 1 July 1992, by means of an announcement in April 1992.  This was subsequently expanded upon in a pensions newsletter the following month, and followed by an amending deed some 18 months later (but before the confirmation in Coloroll as to how Barber should be applied).

In the amending deed of 25 November 1993, NRD was defined as:

“(a) in relation to a female Member before 1 July 1992, her 60th birthday, and

(b) in relation to any other Member his or her 65th birthday”.

The trustees argued that the wording should be interpreted as if it read “…(a) in relation to the Pensionable Service of a female Member before 1 July 1992, her 60th birthday, and (b) in relation to any other Member or Service his or her 65th birthday”.

By contrast, the representative defendant argued that the definition should be interpreted as applying a NRD of 60 for female members who were Members on 1 July 1992, but a NRD of 65 for everyone else.

An application was therefore made to the court for a ruling as to the correct interpretation of the definition.

Decision

Norris J agreed with the trustees and held that wording of the amendment could be interpreted as creating two categories of Pensionable Service, rather than two categories of Member.

His view was that the amendment must be viewed within context of the scheme rules as a whole.  To interpret the amendment otherwise, would render other provisions in the rules (including a proviso in the 1993 deed) nonsensical.

The judge did not, however, take account of either the announcement or subsequent newsletter as these were “statements of subjective intent on the part of the scheme Trustees”.  As such, they were excluded as admissible background (such information only being relevant to questions of rectification).

The Judge also commented on the announcement which sought to change NRD to 65 for all new members joining the scheme from 1 March 1992.  He held that this was wholly ineffective, as it did not constitute an amendment in accordance with the scheme rules.

Comment

Whilst this case does not create any new principles in relation to equalisation, it serves as a useful reminder of the care needed when implementing (or reviewing) any equalisation amendments.