Beaton v The Board of the Pensions Protection Fund

For the purposes of the compensation cap, a benefit is attributable to pensionable service where it is earned through service as an active member of the relevant occupational pension scheme. A pension obtained through a transfer value is attributable to the service and benefits from the transferring scheme, rather than merely to membership of the receiving scheme which enabled the transfer. Parliamentary material may illuminate the mischief addressed by an amendment, but it cannot justify giving statutory language an artificial meaning. Potential anomalies likewise cannot displace the ordinary and conventional meaning of the words.

The appellant was entitled to a fixed pension transferred from the Bowring Scheme and to further final-salary benefits arising from service in the Fenchurch and Lambert Schemes. The Lambert Scheme entered the Pension Protection Fund. The Board aggregated the benefits before applying the statutory compensation cap, and the PPF Ombudsman upheld that approach.

On an appeal on a point of law under Pensions Act 2004, s.217(1), the issue was whether the transferred pension was a benefit attributable to pensionable service under the Lambert Scheme or its connected Fenchurch Scheme for the purposes of paragraph 26 of Schedule 7.

1. Appeal allowed. The court declared that the fixed pension was not a benefit attributable to pensionable service under either the Fenchurch Scheme or the Lambert Scheme. The matter was to be remitted to the Ombudsman to determine the consequences.
2. The phrase “attributable to pensionable service” in paragraph 26(2)(b)(i) of Schedule 7 to the Pensions Act 2004 has its conventional occupational-pensions meaning. It refers to a benefit earned through service to an employer while an active member of a scheme under which the member accrues or earns a future pension.
3. The relevant question is the source of the benefit. The fixed pension arose from Mr Beaton’s service in the Bowring Scheme and the transfer value representing benefits accrued there. Joining the Fenchurch Scheme was a necessary precondition to transferring the value, but that causal connection did not make the pension attributable to pensionable service under the Fenchurch or Lambert Scheme.
4. The statutory language had to be read in the context of the legislation as a whole. Other provisions of Schedule 7, including the definition of pensionable service and references to benefits attributable to particular periods of service or to pension credits, supported the conventional interpretation.
5. The Parliamentary material admissible under Pepper v Hart identified the mischief addressed by the 2014 amendment, namely separating benefits derived from pensionable service from benefits derived from pension credits. It did not provide a sufficiently clear basis for extending the statutory words to all benefits connected with membership of a receiving scheme.
6. Possible anomalies, including different treatment of transfer values expressed as added years and fixed pensions, could not displace the ordinary meaning of the provision. The Ombudsman had therefore erred in construing the transferred pension as attributable to service under the receiving schemes.

• PPF Ombudsman: determined the issue adversely to the appellant and held that the two pensions had to be aggregated before applying the compensation cap.
• High Court (Chancery Division): permission to appeal was granted by Snowden J. Mr Justice Nugee allowed the appeal on the point of statutory construction and remitted the matter to the Ombudsman.