The Pensions Regulator v A Admin Ltd & Ors

A pension trust is void for uncertainty where its governing deed directs the trustee to calculate benefits by reference to statutory provisions that contain no method of calculation, and the deed cannot reasonably be construed as conferring a discretion to determine the benefits. Where a deed provides a pension payable in the future, the member has a right to a future pension for the purposes of section 91(1) of the Pensions Act 1995. The exception in section 91(5)(b) for surrenders to provide benefits for a spouse or dependant is confined to benefits under the same scheme. Later policy announcements and proposed amendments to different legislation do not alter that construction.

The Pensions Regulator brought proceedings under sections 15, 16 and 19 of the Pensions Act 2004 concerning arrangements under which pension scheme members transferred funds to umbrella pension trusts and related corporate entities. The defendants challenged the claim and raised three preliminary issues concerning the validity and operation of the trusts.

The court considered whether the beneficial interests were void for uncertainty, whether they constituted rights to future pensions within section 91(1) of the Pensions Act 1995, and whether proposed surrenders fell within the exception in section 91(5)(b). The court also considered the effect of statutory history, the Goode Report, and recent pension-policy announcements.

1. Certainty. Applying the approach in Whishaw v Stephens [1970] AC 508, the trust deeds were void for uncertainty. They directed the trustee to compute the Primary Pension in accordance with Part 4 of the Finance Act 2004, but Part 4 contained no method for computing pension benefits. The wording could not reasonably be construed as giving the trustee a discretion to determine the amount of the pension. The Certainty Issue was therefore answered in the affirmative.
2. Construction of the deed. The possibility that the schemes could have been drafted differently, or structured without using trusts, did not assist the defendants. The instruments had to be construed as they stood. The objective approach to interpretation stated in Investors Compensation Scheme v West Bromwich Building Society [1998] 1 WLR 896 and Mitsui Construction Co Ltd v A-G of Hong Kong (1986) 33 BLR 14 did not permit the court to supply a missing method of calculation.
3. Right to a future pension. Assuming that the schemes were valid occupational pension schemes and that the trusts were not void, the beneficial interests conferred by the deeds constituted rights to future pensions within section 91(1) of the Pensions Act 1995. The deed provided for payment of the Primary Pension during the member’s lifetime from age 75 and did not confer a discretion to provide no pension at all. Aon Trust Corporation v KPMG [2005] EWCA Civ 1004 supported the distinction between a person currently drawing a pension and a person with a future pension right.
4. Same-scheme exception. Section 91(5)(b) limits the exception to surrenders made to provide benefits under the same pension scheme. The statutory history of section 77(4) of the Pension Schemes Act 1993, together with the policy identified in the Goode Report, supported that construction. Bus Employees Pension Trustees Ltd v Harrod [2000] Ch 258 did not assist because the members here had rights to future pensions rather than merely rights to be considered as objects of a discretionary trust.
5. The three preliminary issues were determined as set out above. Three withdrawn applications were dismissed, with indemnity costs payable by the fifth defendant. Other applications were adjourned for case management.