Safeway v Newton (AG Opinion – 28 March 2019)


In October 2017, the Court of Appeal referred a question to the CJEU regarding a scheme’s ability to equalise its retirement ages retrospectively.

The Advocate General (“the AG”) concluded that the prohibition under EU law on retroactive levelling down applies even when the rules of a pension scheme permit retrospective amendment (as they do in this case).

Background

In Barber v Guardian Royal Exchange the CJEU held that pension benefits were “pay” and therefore the equal pay provisions in Article 119 of the Treaty of Rome (now Article 157 of the Treaty on the Functioning of the European Union) applied to them. This meant that it was discriminatory for schemes to provide different retirement ages for men and women. Trustees and employers were therefore required to take steps to equalise retirement ages.

A series of judgments from 1994 made it clear, among other things, that:

  • for the period up to the Barber decision (17 May 1990), men and women could have different retirement ages
  • in the period between 17 May 1990 and the date upon which the scheme adopted measures to equalise benefits, the retirement age of members was to be “levelled-up” to the move favourable basis (in most schemes this was the female retirement age of 60 years). This period is commonly referred to as the “Barber Window”
  • on and from the date on which a scheme had been validly amended to equalise benefits it could set any retirement age. In practice the male retirement age of 65 was normally used because of the funding implications of allowing all members to retire at age 60.

Facts

Safeway, the Scheme’s principal employer, argued that the Scheme had equalised retirement ages on 1 December 1991 as this was the date on which scheme members had been sent a letter notifying them of the change. However, a formal deed of amendment (which purported to make the change effective retrospectively on and from 1 December 1991) was not entered into until 2 May 1996.

The Scheme’s power of amendment provided for changes to the rules to be made by Supplemental Deed, which could “take effect from a date specified in the Supplemental Deed which may be the date of such Deed or the date of any prior written announcement to Members of the alteration or addition or a date occurring at any reasonable time previous or subsequent to the date of such Deed so as to give the amendment or addition retrospective or future effect as the case may be.”

The Scheme has been administered on the basis that benefits were equalised on 1 December 1991.

Court of Appeal

Safeway appealed the High Court’s decision that equalisation was only valid from the date of the deed of amendment and that it was not possible for the deed to have retrospective effect.

The Court of Appeal was satisfied that any amendment to the Scheme had to be made by deed (ie. the Scheme’s retirement ages were not equalised by the letter to members). However, it was not certain whether the ability to make retrospective changes under the Scheme’s amendment power enabled it to equalise retrospectively. Deciding that there was sufficient uncertainty as to whether a retrospective amendment would be prohibited by EU law, even where it was permitted by domestic law further to a power in the scheme’s rules, the Court of Appeal referred the question to the CJEU.

AG’s opinion

AG Tanchev concluded that the EU prohibition on retroactive levelling down applies even when the rules of a pension scheme confer a power, as a matter of domestic law, permitting adverse changes to be made to members’ benefits retrospectively between the date on which the changes are announced and the date the scheme is actually amended. In his view it “[made] no sense” to construe EU case-law restrictively to preclude retroactive levelling down only where this is also impermissible under Member State law.

Comment

We now wait for the CJEU’s decision. While it is usual for the AG’s opinion to be followed this is not always the case.