BBC v BBC Pension Trust Limited & Anor

The word “interests” in a pension-scheme amendment power may protect more than benefits already earned. For active members, it can include the terms governing future accrual, including the ability to continue accruing benefits and the applicable final-salary linkage. An amendment affecting those interests must comply with the safeguards in the scheme’s amendment power.

Where the employer has consented to an amendment and the specified safeguards are satisfied, the trustees’ implementation of future-benefit redesign is not, merely for that reason, an exercise of the amendment power for an improper purpose. Separate agreement by members is not an additional precondition.

The BBC sought declarations concerning the scope of Rule 19.2 of the BBC Pension Scheme Rules. The rule empowered the Trustee, with the BBC’s consent, to alter or modify the Trust Deed or Rules, subject to provisos protecting members whose interests were affected.

The principal issue was whether “interests” of Active Members included only accrued past-service rights and any final-salary linkage, or also the ability to accrue future-service benefits on existing terms or at all. A related issue was whether the Trustee would act for an improper purpose by implementing future-benefit redesign without prior agreement by affected members, individually or through trade unions.

1. Question 1. Rule 19.2(3) protected the interests of Active Members in a broad, forward-looking sense. The relevant comparison was between their position under the Rules before and after the proposed amendment. If the amendment left them in a different and potentially worse position, their interests were affected.
2. The protected interests included rights earned through past service and the linkage between those rights and future salary increases, subject to the operation of the 2000 definition of Basic Salary upheld in Bradbury v BBC. They also included the ability to accrue future-service benefits on the existing terms and the ability to accrue future-service benefits at all. The uncertainty whether a member would remain in service did not reduce the character of that present interest.
3. The court rejected the argument that “interests” necessarily had the same temporal content wherever used in the Rules. The context of winding-up and the position of retired or deferred members differed from that of Active Members. The wider construction also avoided unnecessary overlap between the third and fifth provisos, the latter reflecting the narrower statutory protection of accrued rights under the Pensions Act 1995.
4. Question 2. The reasoning in British Airways did not govern this case. That case concerned trustees using an amendment power to remodel the balance of powers between trustees and employer. Here, the amendment power could only be exercised with the BBC’s consent. Assuming that consent and compliance with one of the third-proviso safeguards, implementation of future-service redesign would be an exercise for a proper purpose.
5. Prior agreement by Active Members, individually or collectively, was not an additional requirement. Rule 19.2 itself contemplated amendments without such agreement where the actuary certified no substantial prejudice, substantially equivalent benefits were provided, or the change was approved at a duly convened meeting. Questions 1(a)–(d) were answered affirmatively; no separate answer was given to Question 1(e). Both parts of Question 2 were answered in the negative, subject to the stated qualifications.