Premier Foods Group Services Ltd & Anor v RHM Pension Trust Ltd

A pension scheme’s amendment power may be exercised by a deed which makes substantive alterations without rewriting the scheme’s existing text. Pension documentation is construed practically and purposively, using the ordinary principles of contractual construction. Where competing interpretations are available, the court may prefer the interpretation which preserves validity and avoids requiring trustees to act contrary to the governing trust documentation. An operative provision directing administration of a scheme subject to specified alterations may itself constitute an amendment, even though further textual amendments are contemplated.

The employers sought construction of a Deed of Intention concerning the RHM Pension Scheme. Following Barber v Guardian Royal Exchange Case C-262/88, the scheme’s normal pension age had to be equalised for men and women. A resolution and announcement were ineffective, and the parties accepted that the later 1993 Amending Deed would have effect prospectively if the Deed of Intention had not already amended the scheme.

The central issue was whether clause (2) of the Deed of Intention, executed on 15 November 1990, operated under the amendment power in clause 7 of the 1990 Amending Deed, so that normal pension age was equalised at 65 from that date.

1. Construction of pension documentation. The ordinary principles of construction apply to pension scheme documentation. The approach is practical and purposive. Relevant background may include the state of the law, and where wording permits more than one interpretation the court may adopt the interpretation most consistent with business common sense: ICS v West Bromwich Building Society [1998] 1 WLR 896, BCCI v Ali [2002] 1 AC 251 and Rainy Sky SA v Kookmin Bank [2011] 1 WLR 2900.
2. Clause 1. Clause 1 expressed the intention to make further amendments but did not impose a contractual obligation on RHM or the Trustee to execute a later deed. The language of the recitals and clause itself did not support that construction.
3. Clause (2). Clause (2) required the Trustee to administer the scheme subject to substantive alterations, rather than merely on the counterfactual footing that alterations had already been made. That wording indicated that the alterations were intended to be effective.
4. Exercise of the amendment power. Clause 7 did not require a textual substitution of words in the scheme document. A deed made under the power could alter, modify or add to the scheme by providing that it operated subject to identified alterations. A construction requiring the Trustee to operate the scheme contrary to its governing documentation, on the assumption of later retrospective validation, was legally and practically unsatisfactory.
5. Disposition. Clause (2) was effective to amend the scheme under clause 7 of the 1990 Amending Deed. Normal pension age was therefore equalised at 65 for men and women with effect from 15 November 1990.