Why the Burgess & others v Bic decision matters for pensions and wider trust law practitioners

In Burgess & others v Bic, the Trustees were successful in arguing that pension in payment increases referable to pre April 1997 pensionable service had been validly granted.

The sponsoring employer had sought to challenge the increases, primarily on the basis that requisite formalities under the scheme documentation had not been complied with in providing these increases.

The reasoning employed by the judge demonstrates a common sense and practical approach to the interpretation of pension scheme documents, construing various powers under a 1993 trust deed and rules as being capable of giving valid effect to a decision taken in 1991, in relation to the granting of these pension in payment increases.

The witness evidence adduced at trial also demonstrated that a proper decision had been made to grant these increases and the relevant parties, namely the trustees and the principal employer, had provided consent to such a grant of increases at the relevant time.

The case also touched upon a number of other issues that will be of interest to the pensions community. As the trustees won on the main issue and it was confirmed that the increases had been validly granted, the judge noted that this issue of recovering any overpaid amounts from members did not arise.

For completeness, however, he did go on to deal with the issue, and re-affirmed the principle that equitable recoupment – whereby future pensions instalments are reduced to make good any overpaid amounts a member owes to the scheme – would not be subject to a limitation period.

Where there is a dispute as to the amount of set-off, in circumstances where equitable recoupment is used, the judge dismissed the sponsoring employer’s argument that the Pensions Ombudsman could act as a “competent court” which could make an order enforcing the obligation to allow for recoupment – the judge noted that the County Court would instead be viewed as a “competent court” in these circumstances.

The case will be of general interest to practitioners in both the pensions sphere and the wider trust law arena, as it is clear authority for the proposition that a trust power can, in appropriate circumstances, apply retrospectively in order to validate an earlier decision taken in relation to benefits to be provided under the trust. The trustees were represented by Stephenson Harwood LLP.

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