High Court reinstates pension scheme actuary’s power to select inflation measure

The High Court has reinstated the power for the scheme actuary of the Iggesund (UK) Pension Scheme to select the scheme’s inflation measure for pensions indexation, after it was unintentionally deleted from the scheme rules.

The case centred on a power within the scheme’s 1992 rules that enabled the scheme actuary to select an alternative measure to the Retail Prices Index (RPI) for pensions indexation.

This power was unintentionally deleted from the scheme’s 2004 rules after a rules updating exercise, which effectively hardwired RPI as the basis for calculation increases to pensions in payment and deferred pensions.

The High Court said it found no evidence that the paperboard supplier firm or the scheme trustee intended to remove the power and has ordered it to be reinstated into the rules.

Its reinstatement will allow the scheme actuary to switch inflation measure to the Consumer Prices Index (CPI), if they wish to do so.

The drafting error was identified by PwC, resulting in the beginning of proceedings in 2017.

PwC led the project until 31 December 2020, when Iggesund’s parent company, Holmen AB, appointed PwC as its auditor.

Upon its appointment as auditor, Hill Dickinson took over the final stages of the project, including the court hearing, due to audit independence requirements.

Throughout the proceedings, the parties were advised by Keith Rowley QC of Radcliffe Chambers and Nicholas Hill of Outer Temple Chambers.

“Succeeding in a rectification case requires careful planning, in particular with the collation, analysis and presentation of evidence,” said PwC partner, Oliver Reece.

“The master presiding over the High Court case thanked the instructing solicitors for their very thorough review and detailed work in preparation for the hearing, making it easier to grant the rectification relief.”

Hill Dickinson partner, Paula Warnock, added: “The Iggesund case demonstrates how very easily a simple drafting error can lead to potentially unintended longer-term consequences.”

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