Bradbury v British Broadcasting Corporation

An employer and pension-scheme member may make a binding agreement that a pay increase will be only partly pensionable, despite apparently more favourable scheme provisions, provided the agreement is effective and does not breach applicable statutory or implied contractual duties. South West Trains v Wightman and Trustees of the NUS Officials and Employees Superannuation Fund v Pensions Ombudsman support that principle.

Section 91 of the Pensions Act 1995 protects existing rights to future pension benefits, but does not prevent an agreement concerning a disputed or prospective entitlement where no protected right is surrendered. A challenge based on implied duties of trust and confidence requires proper factual investigation and could not be determined for the first time on this appeal.

Mr Bradbury, an employee and member of the BBC Pension Scheme, appealed against the Pensions Ombudsman’s determination dated 24 October 2011 dismissing his complaint. The BBC had offered members of certain pension sections a choice: remain in their existing section with future pay increases capped at 1% for pension purposes, transfer to a new career-average section, or leave the scheme.

Mr Bradbury contended that the cap was contrary to the scheme deed and rules, section 91 of the Pensions Act 1995, the implied duties of trust and confidence in his employment contract, and the statutory jurisdiction concerning maladministration. The central issues were whether the cap could be imposed by agreement and whether the implied-duty complaint could be determined on appeal.

1. Scheme rules and agreement. The BBC’s conduct was not contrary to the scheme documentation in the sense alleged. An active member could agree to accept a pay increase on terms that only part of it was pensionable. The salary increase and its pension treatment were integral and could not be severed. The agreement would therefore bind the member, subject to section 91 and the implied duties: South West Trains v Wightman and the NUS case.
2. Construction of “Basic Salary”. Although unnecessary to the result, the judge considered that the BBC’s broad construction of “Basic Salary” was wrong. The definition did not confer an unrestricted power to exclude part of actual basic salary or pay increases, particularly where that would affect benefits referable to past service. The pre-existing rules and the requirement for actuarial certification supported the narrower construction.
3. Section 91. Section 91 of the Pensions Act 1995 concerns all benefits payable in the future arising from past and future service. It did not, however, prevent the proposed agreement. The member had no entitlement to a salary increase, and accepting an increase subject to the cap did not surrender an existing entitlement or right. The Court of Appeal’s reasoning in IMG was applied.
4. Implied duties. The duties of trust and confidence are not fiduciary duties and do not require the employer to act by reference to ordinary reasonableness or Wednesbury principles. The employer may take its own financial interests into account, although an irrational or perverse exercise of power may breach the duties. The complaint had not been properly investigated before the Ombudsman, and resolving it required evidence. It was therefore inappropriate to decide it for the first time on an appeal limited to points of law. Imperial Group Pension Trust Ltd v Imperial Tobacco Ltd did not compel the result sought by Mr Bradbury.
5. Maladministration and disposition. The maladministration issue raised no separate point. The formal disposition was deferred while the parties considered the procedural way forward, including possible remittal to the Ombudsman or further argument.

• High Court (Chancery Division): on appeal from the Pensions Ombudsman’s determination dated 24 October 2011, the court determined the legal issues but deferred the formal disposition pending agreement or further argument.