Closing the Barber Window – The Scottish Approach

The Johnston Press case give further confirmation that the Scottish courts are willing to take a pragmatic approach to reaching the conclusion that a scheme has validly amended to achieve equalisation of retirement ages.

The decision in The Trustees of the Johnston Press Pension Plan and others v. Sedgwick Noble Lowndes Limited and Mercer [2017] CSOH 21 was published in February 2017.

This is an important decision for trustees to note, particularly because the judgment confirms that Scottish courts are willing to take a practical and sensible approach in establishing whether or not a scheme has validly amended to achieve equalisation of retirement ages for men and women.

About the case

The case concerned four defined benefit pension schemes whose assets and liabilities had subsequently transferred into the Johnston Press Pension Plan. The trustees, the principal employer of the plan and the relevant principal employers of each of the four schemes brought an action against Sedgwick Noble Lowndes Ltd and Mercer Ltd for breach of contractual and delictual duties in respect of their failure to provide adequate advice, including relevant documentation to ensure that the necessary procedural steps were taken in terms of each scheme's documentation to equalise benefits and thereby close the "Barber Window" prior to the execution of a formal deed of amendment for the scheme.

The defenders denied any breach of duty and argued on the basis of narrated facts and documentation it could reasonably be inferred that the necessary steps were taken to close the "Barber Window" in each scheme with the consequence that no additional benefits would be due to members. Hence, the issue before the court was whether the "Barber Window" had been closed in each scheme, and if so, when.

Court ruling

Despite an absence of evidence confirming that the precise procedural requirements necessary under the scheme rules for amendments been adhered to, the court found that there was sufficient evidence to entitle it to be found with the assistance of the presumption of regularity that equalisation occurred at the date the defenders had contended. As such, no loss had been sustained by the trustees etc. and the action was dismissed.

While application of the presumption allowed the court to reach the conclusions that it did, the court was keen to stress that the presumption is just that and can be rebutted by contrary evidence.

This case is a useful addition to the line of Scottish court authorities dealing with pension scheme amendments and provides useful analysis in relation to the applicable of the presumption of regularity and can be used.

Author: Sarah Donnelly

This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

June Crombie

Partner - Head of Pensions (Scotland)

As Head of Pensions in the Scotland office, I bring over 26 years’ experience to my clients to help them to make better decisions and achieve their aims.