Betafence Ltd v Veys & Ors

An informal amendment to pension scheme rules may be effective where the scheme’s amendment power imposes no formal requirements. Its meaning is determined objectively from the contemporaneous documents and surrounding circumstances. A flexible retirement age between 60 and 65 meant that members could choose when to retire within that range, without employer consent or actuarial reduction.

Failure to notify members of an amendment does not invalidate it, although it may support a claim for compensation if members suffer prejudice. An amendment power remains subject to protections for accrued benefits. Where trustees intended to exercise their amendment power but misunderstood the legal effect of the amendment, the decision is not necessarily void for mistake.

The claimant, the principal employer of the TWIL Group Pension Fund, sought declarations concerning amendments made to the scheme rules in 1991 and 1993. The 1991 amendment followed Barber v. Guardian Royal Exchange and raised the question whether members could retire between 60 and 65 without deduction only with the employer’s consent.

The 1993 amendment expressly introduced such a consent requirement. The beneficiaries challenged its validity on grounds including non-notification, the protection of accrued benefits, severance and mistake. The court also considered the effect of statutory protections for early leavers.

1. 1991 amendment. The amendment was effective without any requirement for consent. Read in context, the documents showed an intention to equalise normal retirement ages at 65 while extending to male members the existing female entitlement to retire between 60 and 65 without reduction. The amendment applied equally to existing and new members and, on the evidence, also benefited existing deferred members.
2. Early leavers. If necessary, paragraph 4 of Schedule 16 to the Social Security Act 1973 extended the benefit to relevant early leavers. The exception for special early-retirement rules did not apply where no particular ground for early retirement had to be established.
3. 1993 amendment. The amendment was invalid to the extent that it purported to affect accrued benefits protected by the amendment power. Failure to notify members did not invalidate it. The consent requirement was effective for benefits accruing after the amendment, since the limitation protecting accrued benefits was clear and required no separate severance exercise.
4. Mistake. Applying the principles in In re Hastings Bass deceased and Sieff v. Fox, the 1993 amendment remained valid. The trustees intended to exercise their amendment power, although they mistakenly believed they were merely formalising the 1991 amendment. This was materially different from the absence of any exercise of discretion considered in Turner v. Turner.

First-instance decision. No prior appellate decision is stated in the judgment.