PI Consulting (Trustee Services) Ltd v The Pensions Regulator & Ors

Whether a pension arrangement is an occupational pension scheme depends on the statutory definition, construed objectively by reference to the purpose and terms of the scheme. Descriptive labels used by the parties carry little weight. A single scheme may have the purpose of providing benefits both to people with service in employments of a description and to other people. It is not thereby divided into separate schemes. For the founder requirement, a limited company with a director in an employment of the relevant description satisfies the requirement that the scheme be established by a person who employs such people, even where there is no evidence that the director was remunerated. The court left undecided whether a relevant employee must be employed at the precise time when the scheme is established.

Two Part 8 claims concerned nine pension schemes. Pi Consulting sought a declaration concerning the 5G Futures Pension Scheme. Dalriada Trustees sought determinations concerning eight further schemes, with the Ironstream Scheme treated as representative. The Pensions Regulator had appointed independent trustees on the basis that the schemes were occupational pension schemes, but later contended that they were not within section 1 of the Pension Schemes Act 1993.

The parties agreed that the court should assume that the deeds and rules genuinely recorded the relevant schemes and should not determine whether any document was a sham. The issues were whether the schemes satisfied the statutory purpose requirement and whether they were established by a qualifying founder.

1. The court proceeded on the agreed assumption that the deeds and rules were genuine. It did not determine whether any scheme was a sham, leaving that issue open to the Pensions Regulator.

2. The purpose of a scheme under section 1(1) of the Pension Schemes Act 1993 is assessed objectively by construing the scheme documents. The relevant question is the purpose of the scheme, not the subjective motives, beliefs or intentions of the parties. Background material may assist construction, but material directed to showing that the parties did not intend to operate the documents, or did not operate them, was relevant principally to a sham issue.

3. The express terms of the 5G Futures Scheme and the Ironstream Scheme, including the eligibility provisions, showed a purpose of providing benefits to people with service in employments of a description and also to other people. The schemes therefore satisfied section 1(1)(a)(ii). The labels describing them as personal or occupational pension schemes were of little or no weight.

4. The deeds and rules created one scheme in each case. The inclusion of employees and non-employees as potential beneficiaries did not create separate occupational and non-occupational schemes.

5. For the founder requirement, a company director holds an office and is in employment and is employed for the purposes of section 181. In the context of these provisions, the company is the person who employs its director. Section 1(3), which identifies the person responsible for paying an office-holder as the employer where the office-holder is entitled to remuneration, did not apply on the evidence because remuneration had not been established. It did not prevent the company from being identified as the employer.

6. The court therefore held that the founder requirement was satisfied for all nine schemes. It did not decide whether section 1(2)(a) requires a qualifying employee to be employed at the exact time of establishment, because the alternative founder ground was sufficient.

7. The 5G Futures Pension Scheme and each of the eight schemes represented by the Ironstream Scheme were occupational pension schemes within section 1 of the Pension Schemes Act 1993.