Walker Morris Trustees Ltd.v Masterson & Anor

A pension scheme amendment power requiring the trustees to obtain written actuarial advice must be given its clear, all-embracing effect. The court cannot dispense with that requirement by adopting a practical construction designed to preserve amendments which were made without the advice. A statutory certificate serving a different purpose does not satisfy the contractual requirement. A separate power to utilise actuarial surplus may validly support benefit improvements where its conditions are fulfilled. A power to augment benefits for individual members cannot be used retrospectively to preserve general class-wide amendments.

The claimant trustee sought declarations and directions concerning the benefits payable under the Yorkshire Chemicals Pension Scheme. Numerous deeds, resolutions and amendments had altered the scheme since its establishment, but actuarial advice required by the amendment power had generally not been obtained. The principal questions were whether the amendments were valid, whether certificates under section 67 of the Pensions Act 1995 could satisfy the deed’s requirement, whether the 1991 resolution could be upheld as an application of surplus, and whether invalid amendments could be saved by the augmentation power in the 1986 deed.

1. The category 1 and category 2 deeds were ineffective because clause 12 required written actuarial advice for every alteration or modification, subject to its express exceptions. The wording was clear and practical. It could not be re-construed to distinguish amendments which were beneficial from those which might prejudice accrued interests.
2. The court rejected the proposed implied term that the requirement could be treated as satisfied where an actuary would probably have given the necessary advice. That would amount to rewriting or waiving the deed’s requirements.
3. Certificates under section 67 of the Pensions Act 1995 served a different purpose. They assessed the statutory effect of an amendment by reference to accrued rights, whereas clause 12 required consideration of benefits secured under the scheme, including prospective final-salary benefits. The certificates could not validate the 2001 and 2003 amendments.
4. The 1991 resolution was valid. Clause 10 of the 1986 deed was a separate, free-standing power governing the utilisation of surplus. The trustees had acted on actuarial advice and used the surplus for scheme purposes. The fact that the resolution went beyond the minimum required to maintain Inland Revenue approval did not invalidate it.
5. The augmentation power could not save the relevant parts of the 1994 deed. It concerned augmentation of benefits for particular members, not the alteration of general class benefits. The proposed severance would create an artificial and administratively unworkable benefit structure.

The court therefore upheld the 1991 resolution but rejected the attempts to preserve the other impugned amendments.

not stated in the judgment.