Pitmans Trustees Ltd. & Ors v The Telecommunications Group Plc

A hybrid occupational pension scheme providing both final salary and money purchase benefits remains one scheme for the purposes of s.75 of the Pensions Act 1995, unless legislation requires separate treatment. Statutory sectionalisation provisions must be satisfied before sections are treated as separate schemes.

Consultation under s.35(5)(b) requires a genuine invitation to comment on the proposed revised statement of investment principles, supported by sufficient information and a reasonable opportunity to respond. Prior consultation is a pre-condition to the valid exercise of the power. Failure to consult invalidates the purported statement and any actuarial certificate based on it.

The claimant trustees administered a pension plan formed by merging a final salary scheme with a money purchase scheme. The plan was later terminated and wound up with insufficient assets to meet all benefits.

The trustees sought summary judgment for a statutory debt under s.75 of the Pensions Act 1995, based on an actuarial valuation incorporating a gilts-matching policy. The defendant disputed liability, contending that the plan comprised separate schemes and that the trustees had failed to consult it before revising the statement of investment principles. The court also considered the effect of the phrase “the applicable time” in s.75(3).

1. Single scheme. The plan constituted one occupational pension scheme and one trust fund. The transferred assets were received by the plan trustees subject to the plan’s trusts. The rules did not segregate assets according to their source or restrict the use of the fund to particular benefits. The plan therefore comprised both final salary and money purchase benefits for s.75 purposes.
2. Sectionalisation. The conditions in s.75(1B) of the Pensions Act 1995, as inserted by the Deficiency Regulations, were not satisfied. The provisions concerning employee eligibility did not create separate sections applying to different employers. The plan could not be treated as separate schemes merely because it contained different benefit structures.
3. Consultation. Applying the principles in Agricultural, Horticultural and Forestry Industry Training Board v Aylesbury Mushrooms Ltd and R v Secretary of State for Social Services, ex parte Association of Metropolitan Authorities, consultation required a genuine invitation to give advice, sufficient information to enable helpful advice, and a receptive mind. The trustees sent no draft statement, indicated that they intended to proceed immediately, and allowed an inadequate period over a bank holiday. There was no consultation within s.35(5)(b).
4. The consultation requirement was a pre-condition to the exercise of the power to prepare or revise the statement. The purported revised statement was invalid and of no effect. The actuarial certificate based on it was consequently invalid, so the statutory debt had not been established under s.75(5).
5. The court considered that the statement would have described a gilts-matching policy had it been validly adopted. It also expressed provisional views that the sham, improper purpose and non-implementation arguments would have failed, but those issues were unnecessary to decide.
6. The action and the trustees’ summary judgment application were summarily dismissed. It was unnecessary to determine the remaining specific issues.