Pensions in court - ones to watch in 2018

Written by Natalie Tuck

On the back of what was a very busy year for pensions litigation cases in 2017, which saw rulings on same-sex pension rights, defined benefit indexation, and whether certain company pension changes were lawful, to name a few, 2018 is set to be just as busy.

The first ruling of the year is likely to be the pensions age discrimination case which involved both the judges and firefighters pension scheme. The case was heard in December and a decision is expected at the end of January.

“Whilst both of these cases stem from public sector disputes, it is likely that the decision will have a wider impact for employers. If the case reaches the Court of Appeal or the Supreme Court, it may provide useful guidance on avoiding age discrimination issues when implementing pension benefit changes,” Gowling WLG partner Peter Shave said.

In addition, Barnardo's and others v Buckinghamshire and others is expected to be heard this year. In 2016, the Court of Appeal denied the trustees of the scheme the right to switch its index linked payments from RPI to CPI.

An appeal was originally expected to be heard in 2017, however, it is now expected in June this year, according to Shave.

“This case is a useful one for diligent drafters. The Court of Appeal paid particular attention to the words ‘or any replacement adopted by the trustees without prejudicing approval’. Does this definition of RPI in the scheme rules in question permit the trustees to select any index to replace RPI? Or does RPI first have to be officially replaced before this replacement index can be adopted by the trustees?

“Expect even more scrutiny when this is heard by the Supreme Court in June 2018. More broadly, many in the pensions industry will be hoping for some clear and practical guidance from the Supreme Court on whether trustees have scope to change the scheme's measure of inflation (if not necessarily whether they should do so).”

The Pensions Regulator will also be back in court this time at the Upper Tribunal, with the hearing being the first time an anti-avoidance case by TPR has been heard in full in the Upper Tribunal.

“The Court of Appeal and the Upper Tribunal have both considered issues raised by the ongoing wrangle between The Pensions Regulator and the sponsoring employers of the Box Clever Group Pension Scheme. In 2018, the Upper Tribunal will move on to substantive issues. This case promises to provide greater clarity on the circumstances in which The Pensions Regulator can issue a financial support direction and the process it has to follow in order to do so,” Shave said.

The second half of the year will see the case of Lloyds Banking Group Pensions Trustees Limited v Lloyds Bank PLC and others heard in the High Court. “To equalise GMPs or not to equalise GMPs, that is the question that many in the pensions industry have hoped to avoid for as long as possible,” Shave said.

“Lloyds Banking Group may not be able to defer action beyond 2018, as a case involving female employees, pension scheme trustees and the Lloyds Trade Union should be heard next year. The litigation is intended to establish what the equalisation of guaranteed minimum pensions (GMPs) means in practice. It may result in the government and/or the pensions industry taking serious action to deal with this issue. More likely, a couple of appeals will kick the problem down the road until at least 2020.”

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