Devon and Somerset Fire and Rescue Authority v Lee Howell & Anor

For transitional protection of an early pension under Schedule 36 to the Finance Act 2004, an actual right must be an immediate right subject to no contingencies. A prospective right may depend on future events or conditions wholly within the member’s control. It does not include a right that arises only if a third party later gives consent or permission.

Where pension scheme rules require an employer, scheme manager or trustee to permit early retirement before the right to the pension arises, the member lacks the required actual or prospective right. Payment before normal minimum pension age is therefore unauthorised if the transitional entitlement condition is not met.

The Fire Authority brought a Part 8 claim concerning whether Mr Howell, its Chief Fire Officer and a member of the Firemen’s Pension Scheme, had protected rights to take an ordinary pension before age 55.

Under rule B1 of Schedule 2 to the Firemen’s Pension Scheme Order 1992, a Chief Fire Officer retiring before age 55 required the Fire Authority’s permission to give the relevant notice of retirement. The issue was whether that conditional entitlement constituted an actual or prospective right to benefits under paragraph 22(4)(a) of Schedule 36 to the Finance Act 2004.

1. Construction of the transitional provision. The court construed “actual or prospective right to benefits” in its statutory context, with assistance from the Explanatory Notes. An actual right means an immediate entitlement to payment subject to no contingencies. A future right may be prospective where it depends on natural events, such as reaching a specified age, or on conditions wholly within the member’s control.
2. A condition requiring third-party consent or permission before any right to the pension arises is different. It prevents the right from being an actual or prospective right within paragraph 22(4)(a) of Schedule 36. The employee must be able to exercise the right unilaterally, subject only to relevant contingencies.
3. Application to rule B1. Rule B1(3) conferred an ordinary pension only on a person to whom the rule applied. Rule B1(2)(b) excluded a Chief Fire Officer retiring before 55 unless the retirement notice had been given with the Fire Authority’s permission. The natural construction was that no right to the early pension existed unless and until permission was given. This was not a condition subsequent removing an existing right.
4. Mr Howell therefore had no actual or prospective right to an early pension on 5 April 2006. The entitlement condition in paragraph 22(4) of Schedule 36 was not met. Any payment of a pension to him before age 55 would consequently be an unauthorised payment under the Finance Act 2004.
5. The court declined to determine the retirement condition in paragraph 22(7), because the issue had not been properly formulated and had not received full evidence or argument. Consequential matters, including permission to appeal, were adjourned.