Summary

A member of a company pension scheme, retiring from service before normal retirement date on the grounds of redundancy, could only take an immediate pension which was not reduced actuarially to reflect the acceleration of payment, if the employer gave its consent to the unreduced provision.

Facts

The trustee of a pension scheme sought the court's interpretation of a company pension scheme. The scheme, which had a complicated history and was designed to receive transfers of existing pension entitlement from members of another scheme, was set up by an interim trust deed dated 8 October 1987, which was superseded by a definitive trust deed dated 1 March 1991. The trust deed was the subject of a number of amendments and was replaced by a new definitive trust deed in January 1998. The issue was the circumstances in which a member, retiring from service before normal retirement date, could take an immediate pension which was not reduced actuarially to reflect the acceleration of payment, if retirement was not on health grounds. The scheme and its predecessor had applied exceptions to the normal rule as to actuarial reduction. If the member's age, plus length of service at a given date amounted to at least 85 and he was retiring at the request of the employer there would be an exception ('the rule of 85'). If the total was at least 90 and the member was taking voluntary early retirement, there would also be an exception ('the rule of 90'). The second defendant, 'H', was dismissed on the grounds of redundancy in 1998 and took an immediate reduced pension, even though he satisfied the rule of 85. He claimed that his pension should not have been reduced. An employment tribunal upheld his complaint that the employer was in breach of contract in not securing for him an unreduced pension. The employer's appeal was stayed pending this hearing. The employer contended that an immediate unreduced pension was only payable, on the true construction of the governing instruments, if the employer consented to the member retiring with an immediate unreduced pension (rule 57). The employee argued that a retirement from service brought about by a dismissal for redundancy was necessarily a retirement with the consent of the employer, and that if the rule of 85 applied to a particular member on the facts, an unreduced pension was payable as of right. Alternatively, the company and the trustees were bound by estoppel and could not assert otherwise.

Held

(1) The effect of the 1998 rules was that the availability of the immediate pension option under rule 57, and therefore of the unreduced provision under rule 57.4 or 57.5, depended on the employer agreeing to it, not just to the employer agreeing to the member leaving service. Where a person was dismissed on grounds of redundancy, that act by the employer did not constitute the necessary consent. (2) The 1991 deed also required a separate consent for the early retirement pension option to be available, even in a case of dismissal for redundancy, and, accordingly, the amendments represented by the 1998 deed did not infringe proviso (ii) to the amendment power. There was also no change of substance in this respect at or before the time of the 1991 deed and therefore no infringement of any earlier amendment power. The proper reading of the 1998 deed was unaffected by the previous history of the relevant provisions. (3) In relation to estoppel and pensions the judge followed the approach of Laddie J in ITN v Ward (1997) PLR 131. The judge treated the case as one of estoppel by representation. The circumstances and terms of communications to members did not show that there had been an estoppel. The employer and the trustees were not estopped from asserting that consent was required.

Issues answered accordingly.