A decision in relation to amendment of scheme documentation goes against the trend of adopting a commercial approach that has come to be expected from the Scottish Courts.
In the recent case of Bett Homes Ltd v Wood and others, a Scottish company had mixed results in their application to court to assist with the interpretation of pension scheme documentation.
The Court of Session considered two main questions regarding compliance with formalities set out in the trust deed and rules governing the Bett Limited Superannuation and Life Assurance Scheme:
- Whether there had been agreement to amend the rate at which pensions in payment increased with effect from 28 October 1992 (the "Pension Increases" issue).
- Whether there had been an agreement to equalise retirement ages for men and women with effect from 1 January 1993 (the "Equalisation" issue).
The court held that there had been agreement to make the change in relation to the Pension Increases issue but not the Equalisation issue. It was concluded there was sufficient evidence to infer that the Trustees had decided to the change the Pension Increases, the company had agreed to it and the members had been duly informed. However, the court took a different position on the Equalisation issue. It concluded that while there was evidence of the company's decision-making it could not be inferred that the Trustees had consented to any change, and it could not be proved that an announcement intimating the change had been issued to everyone due to receive it.
The decision goes against the trend of recent Scottish cases which has been to adopt a more flexible commercial approach when interpreting pension scheme documentation, so it came as bit of a surprise for Scottish practitioners. English practitioners have monitored developments in Scottish cases with interest, contrasting the approach in those with the more strict literal approach adopted by English courts. Employers, trustees and their advisers will no doubt continue to watch this area of the law with interest.
If you have any questions or would like more information, please contact one of our pensions specialists below.