MNOPF Trustees Ltd. v FT Everard & Sons Ltd. & Ors

A pension scheme’s power to amend its trust deed and rules may impose additional funding obligations on all employers falling within a wide defined class of participating employers, including former employers. An accession agreement binding an employer to obligations undertaken by participating employers under subsequent variations ordinarily incorporates the full scope of the amendment power. The absence of active members does not, without express provision, end participation or liability. Sectionalisation of a scheme into separate benefit sections does not itself prevent a scheme-wide power to address a deficiency, although the trustee must exercise that discretion rationally and fairly having regard to the separate sections.

The claimant trustee sought declarations concerning the liability of three classes of former and current employers under the Merchant Navy Officers Pension Fund. A 2000 deed amended the definition of “Participating Employers” and introduced Rule 5.2A, allowing the trustee to require further contributions to reduce or eliminate a deficiency. The principal issue was whether employers that had ceased to employ active members before the amendment were bound by it. A further issue concerned employers that had ceased active participation before the Scheme was divided into Pre-1978 and Post-1978 Sections.

1. Scope of the amendment power. Clause 30 of the Trust Deed conferred a general power to vary or add to the Trust Deed and Rules, subject to its express safeguards. Rule 29.2 required the trustee to consider how to remedy a deficiency but did not confine the available remedy to increased contributions from employers retaining active members.
2. Meaning of participating employers. The Rule 3 definition was comprehensive and included companies which had previously become participating employers under earlier scheme documentation. The term could bear a different meaning where inconsistent with context, but no sufficient contextual reason existed here to narrow it to employers with current active members.
3. Effect of accession agreements. The accession agreements required employers to assume and remain bound by obligations undertaken by participating employers under the Trust Deed and Rules or under any subsequent variation. That language incorporated future obligations validly imposed under clause 30, including Rule 5.2A. The defendants had never ceased to be part of the Scheme merely because they no longer employed active members.
4. Alternative argument. There was no basis for maintaining liability while an employer continued to employ persons within clause 6.1 but ending it when it no longer did so. That construction was unsupported by the wording and introduced further uncertainty.
5. Pre-1978 employers. The 1978 sectionalisation separated assets, accounts, valuations and benefits, but preserved Rule 29.2 and clause 30 as scheme-wide powers. Nothing expressly excluded those powers from being exercised in relation to the Scheme as a whole. Pre-1978 employers therefore remained within the Rule 3 definition and could fall within the class from which contributions might be sought under Rule 5.2A, subject to the trustee’s discretion.
6. The court answered the relevant questions in the claim form in accordance with option (1) and held that Pre-1978 employers were included in the relevant class. The form of order and consequential matters were adjourned.