A number of interesting decisions on pensions matters have recently been made by the High Court.  They have pensions in common but otherwise cover unrelated subjects.  Any links we tried to draw between the cases would be extremely contrived, and so we simply set out for you a few details and comment on each of the cases.  Your thoughts are very welcome.

When does the clock stop?

Our first case[1] concerns the identification of the date on which a claim to the Pensions Ombudsman can be said to be made.  A member of the Teachers’ Pension Scheme was overpaid his pension for a number of years.  He repaid the amount wrongly paid to him, but complained to the Ombudsman.  A relevant principle here is that overpayments could only be claimed by the administrator for the period of six years prior to the cut-off date.

In a Court claim, the cut-off date is the date on which the Court receives the claim form.  One of the questions considered in this case when before the Pensions Ombudsman and later before the High Court was what was the equivalent cut-off date when a complaint is made to the Pensions Ombudsman?

The Court held that the cut-off date was the date on which the administrator’s written response to the complaint was received by the Ombudsman (in 2011); it was not the date on which the administrator first sought repayment of the overpayments, in 2009.

Point to note – Trustees and administrators should ensure that complaints are dealt with promptly – in this case two years had passed between the date on which the administrator effectively became aware of the overpayment and the cut-off date.  It could only claim repayments for the six year period ending in 2011, rather than the six year period ending in 2009.

Sharing pensions – but not overseas[2]

A wife applied for a pension sharing order in respect of her husband’s pension policy, which he had converted to an Indian annuity. The Court of Appeal had held in an earlier hearing of the matter that in principle, pension sharing orders could be made in England against overseas pensions.

Notwithstanding the Court of Appeal’s view, the High Court judge held that pension sharing in England is not available in respect of an overseas pension. It will be interesting to see what approach the Court of Appeal takes when it is next faced with a similar situation.

A more relaxed approach to putting it right?

In two recent cases the High Court has granted an application for rectification by summary judgment, further proof that the courts are increasingly willing to consider granting rectification in this way.  In the first[3], a deed of amendment had been executed in which the method of calculating increases to spouses’ pensions had been inadvertently altered.  This was shown not to be the parties’ intentions and the deed was rectified.

In the second case[4], the High Court granted an application for rectification by summary judgment to correct an error made during a deed consolidation exercise which had changed the basis on which members’ pensions were calculated.

In both cases it was highlighted that the relevant principles were those in the IBM[5] case – it is the objective intentions of the parties that are relevant rather than their subjective intentions in deciding whether to grant rectification of a scheme document.

Delivering on a promise[6]

The predecessor of the Police and Crime Commissioner for Greater Manchester (PCC), the Greater Manchester Police Authority, entered into a compromise agreement with Ms Butterworth on the termination of her employment.  One of the clauses of the agreement provided that she could retire at age 55 with an unreduced pension from the Local Government Pension Scheme (LGPS). As Ms Butterworth approached age 55, she applied for the unreduced pension.  She was told that in accordance with the rules of the LGPS, the employer’s consent was required but in addition, compassionate grounds for paying the pension unreduced must exist. As there were no such compassionate grounds, the payment of the pension on an unreduced basis was refused.  Ms Butterworth complained to the Pensions Ombudsman. The Ombudsman directed the PCC to pay, from its own funds, a bridging pension equivalent to the unreduced benefit and £2,000 for the distress and inconvenience experienced by Ms Butterworth.

On appeal the High Court overturned the decision of the Pensions Ombudsman. It held that the Ombudsman had misinterpreted the relevant clause in the compromise agreement.  The clause permitted the payment of the pension at age 55 on an unreduced basis, but only insofar as that complied with the rules of the LGPS.   There were no compassionate grounds, as required by the rules of the LGPS, and so the PCC was within its rights to refuse the unreduced early payment.  From the perspective of a pension scheme member in particular, the lesson learned from this case is that it is important to ensure that the employer has the power to deliver on any pensions promises contained in compromise agreements.

This post was edited by Patricia Bailey. For more information, email blogs@gateleyplc.com 

[1] Webber v Department for Education and another [2016] EWHC 2519 (Ch)

[2] Goyal v Goyal [2016] EWFC 50

[3] Sovereign Trustees Ltd and Anor v Lewis [2016] EWHC 2593 (Ch)

[4] Saga Group Ltd and Anor v Paul 2016 EWHC 2344 (Ch)

[5] IBM Pension Plan [2012] EWCH 2766

[6] Police and Crime Commissioner for Greater Manchester v Butterworth and Anor [2016] ICR 456

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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.