Capita ATL Pension Trustees Ltd & Anor v Gellately & Ors

A pension scheme’s general amendment power must be exercised in the form required by the trust deed. A general change to normal retirement age cannot ordinarily be achieved through wording in a rule definition which permits a different arrangement by agreement, where that wording is construed as applying only to individual members. An announcement of intended amendments, and a member’s acknowledgement of it, does not create a contract or estoppel unless it objectively records an agreement and the necessary reliance. Invalid amendments may require restitution of excess contributions and payment of benefits wrongly withheld.

The trustees sought directions concerning purported amendments to the Sea Containers 1990 Pension Scheme. The 1991 changes sought to equalise minimum pension age and normal retirement date for new joiners, but were not executed by deed. The 1995 Announcement sought wider changes, including a normal retirement age of 65, alterations to Scheme Pay, and removal of a cash lump sum. Those changes were not implemented through the formal amendment procedure until 2003.

The court determined whether the changes were valid under the Scheme documents, whether the 1995 Announcement created contractual or estoppel rights for members who signed an acknowledgement, and how resulting contribution and pension adjustments should be administered.

1. 1991 amendments. Clause 26 of the Interim Deed required amendments to the deed or announcements to be made by deed. The requirement could not be avoided through clause 5(f), and there was no sufficient evidence of a lost deed, extrinsic agreement or estoppel. The 1991 equalisation was therefore ineffective. Eligible members retained the right to elect benefits by reference to the more favourable minimum pension age and normal retirement date for the relevant post-Barber service.
2. Scope of the 1995 NRD wording. The 1995 Deed and Rules had to be construed practically and purposively, but that approach did not justify bypassing the formal safeguards in clause 21. The words permitting a normal retirement date otherwise agreed by the Employers and Trustees were confined to special arrangements for individual members. They did not confer a power to make a scheme-wide amendment without a deed or board resolution. The court left open whether the power could be exercised only when a member joined.
3. Exercise of the alleged power. Even if the power had been wider, the 1995 Announcement did not exercise it. It described intended future changes, stated that formal documents would prevail, and did not establish agreement by all participating employers and the Trustees.
4. Contract and estoppel. A member’s signed acknowledgement recorded understanding of preliminary information and consent to increased contributions if and when valid amendments took effect. It was not an offer or acceptance of the whole package of changes. No immediate contract arose, and no detrimental reliance capable of founding estoppel was established.
5. Consequences. Excess contributions were to be repaid with compound interest at 5.3% annually. Pension underpayments and omitted cash lump sums were to be made good by payment of their capital value, using the same rate. The Trustees were directed not to recover small overpayments from three widows, because recovery would cause distress and would not be cost-effective. A declaration concerning the British Rail Members was also made, permitting further members to be added if evidence later emerged.