Newell Trustees Limited v Newell Rubbermaid UK Services Limited & Anor

The court determined two principal issues: (1) whether the 1992 Interim Amending Deed (and, subsidiarily, the 1993 Definitive Deed) validly created a money purchase (defined contribution) section of the Parker Pension Plan and converted affected members' accrued final salary (defined benefit) rights into cash sums; and (2) whether the automatic transfers effected in 1992 gave rise to unlawful age discrimination. The judge found that the 1992 Deed was valid and operated as an executory trust, that the booklets were annexed and signed for identification, and that members were transferred or (where applicable) validly consented to transfer with effect from 1 January 1992.

The court held that the deeded conversion itself did not breach the clause 5 proviso in the 1979 Deed (the "Proviso") but that the Proviso forbade breaking the final pensionable salary link for accrued service. To protect accrued rights an implied final‑salary underpin was required: transfer sums should, retrospectively, have reflected members' accrued final‑salary entitlement as at 1 January 1992 and any shortfall must be topped up into the member's money‑purchase account with appropriate accumulation.

The age discrimination claim under the Equality Act 2010 failed. The judge concluded there is no present scheme rule that requires the trustee to act in breach of the statutory non‑discrimination rule and, even on alternative assumptions, the transitional arrangements would be objectively justifiable.

Background and nature of proceedings.

The sole trustee of the Newell Rubbermaid UK Pension Scheme brought a Part 8 claim seeking directions as to the pension entitlements of members affected by amendments introduced by an Interim Amending Deed dated 6 January 1992 (the "1992 Deed") and implemented by an accompanying pair of member booklets. The principal issues were (A) Transfer and Conversion Issues: validity and legal effect of the 1992 Deed (and, if necessary, the 1993 Definitive Deed) in creating a money purchase section and converting accrued final salary rights into cash; and (B) Age Discrimination Issues under the Equality Act 2010, including whether the trustee is or will be obliged to act incompatibly with the statutory non‑discrimination rule.

Parties, evidence and procedure.

• The Trustee took a neutral stance and sought directions. The First Defendant (the employer) and a representative former member (the RB) took opposing positions on validity and discrimination. The court heard factual witnesses and actuarial experts and admitted contemporaneous documents including the 1992 Deed, booklets, drafts and contemporaneous legal and actuarial advice.

Issues framed by the court.

• Whether the booklets were annexed to and signed for identification by the 1992 Deed and whether those documents lawfully established a money purchase section effective 1 January 1992.
• Whether members' consent (written or contractual) had been obtained where required, and whether extrinsic contracts arose with 40–44 year‑olds who opted to transfer.
• Whether the clause 5 proviso in the 1979 Deed (the "Proviso") precluded conversion or required protection of the final pensionable salary link, and if so what remedy should follow.
• Whether the Scheme's rules or present administration infringe the Equality Act 2010 non‑discrimination rule in respect of age.

Court's reasoning and conclusions.

1. The 1992 Deed was signed on 6 January 1992 and the pair of booklets dated 19 December 1991 were annexed and signed for identification by the persons named. The 1992 Deed operated as an executory trust pending a definitive deed; the parties and professional advisers had intended the changes to take effect from 1 January 1992.
2. Accordingly, subject to the Proviso, the 1992 Deed validly established a money purchase section and effected conversion and transfer to that section of the Under 40s and of 40–44s who elected to transfer.
3. If the 1992 Deed had been invalid, the 1993 Definitive Deed would in any event have been effective with retrospective effect from 1 January 1992, and the acceptance forms completed by members amounted to written consent and, in the case of electing 40–44s, created enforceable extrinsic contracts with the employer (consideration being employer enhancements to transfer sums).
4. The Proviso did not prohibit conversion per se but did protect accrued final salary rights so as to prevent severing the final pensionable salary link in respect of accrued service. To give effect to the Proviso an underpin is implied: the transferred cash sums must be tested retrospectively against the actuarial cash value of accrued final salary entitlements as at 1 January 1992 (using actual subsequent salary outcomes); any shortfall must be topped up and accumulated into members' money‑purchase accounts.
5. The age discrimination claim failed because the trustee is not obliged by any current scheme rule to act incompatibly with the statutory non‑discrimination rule. Even on alternative assumptions, the transitional arrangements were found to be objectively justifiable and temporal limitation arguments (relating to pre‑2006 service and retained EU law) do not assist the RB.

Remedies and directions.

The court declared the 1992 Deed valid and effective, ordered that a final‑salary underpin be applied as described, and dismissed the age discrimination claim. The judge left some consequential questions (notably the precise rate and application of interest on any arrears) to be dealt with subsequently.

The Trustee's Part 8 application was allowed in part. The court declared the 1992 Interim Amending Deed valid and effective to create a money purchase section and to effect transfers/conversions with effect from 1 January 1992; however the conversion was subject to an implied final‑salary underpin protecting accrued final salary rights as at 1 January 1992 and any shortfall in the transfer sums must be topped up with accumulation. The age discrimination claim under the Equality Act 2010 was dismissed for want of a present scheme rule obliging the Trustee to act incompatibly with the statutory non‑discrimination rule (and, on alternative assumptions, the transitional arrangements were justified).