It is a fundamental principle of pensions law that ‘subsisting rights’ in occupational pension schemes (ie. those rights which have already been accrued) are protected.

If amendments to members’ subsisting rights are made without following certain steps, those amendments are treated as voidable at the discretion of the Pensions Regulator. This power is rarely used. However, on 4 October 2016, the Regulator published its report on amendments to the DCT Civil Engineering Staff Pension Fund (DCT Fund) which it had decided to treat as being void.

The facts were relatively simple. The DCT Fund was established as a DB pension scheme and was administered as such until its sponsoring employer became insolvent in 2014. At that point, an assessment period commenced to establish whether the PPF should assume responsibility for the DCT Fund and a review was carried out of the governing documentation.

In 2010, the trustees had executed a deed (drafted by their lawyers) which replaced the DCT Fund’s existing rules with new rules which would have provided for all benefits in the scheme to be calculated on a DC basis. It was, however, clear from the evidence that the trustees had not intended to make this change and that their lawyers had produced a deed which was contrary to their intentions. The scheme actuary had highlighted the inconsistency and questioned whether the deed could be signed but the trustees had not taken any action in respect of that advice.

A new trustee was appointed following the employer’s insolvency and an application was made to the Pensions Regulator. The application asked the Regulator to exercise its power under section 67G of the Pensions Act 1995 to void the 2010 deed on the grounds that it adversely affected members’ subsisting rights and did not comply with the requirements of the subsisting rights legislation.

The Regulator agreed with the application and declared the 2010 deed to be void. As a result, the DCT Fund remained eligible for the PPF and the PPF has now assumed responsibility for the assets and liabilities of the DCT Fund.

The circumstances leading to this issue should hopefully not be repeated too frequently as they appear to have been created largely by poor drafting from the lawyers and a lack of engagement from the trustees – neither of which we recognise from dealings with our own clients! However, the Regulator’s intervention demonstrates that, in certain cases, it will use its powers to achieve an outcome which would otherwise have required a potentially costly application to the High Court for rectification.

This post was edited by Stephen Maynard. For more information, email

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.