The Employment Appeal Tribunal has commented that, whilst an employment tribunal is not to be encouraged to adopt a ‘pick and mix’ approach to calculating pension loss, it may do so provided that it does so for cogent and credible reasons; it states what those reasons are; and the interests of justice require this approach.
The Employment Tribunal had calculated pension loss on the basis of the ‘substantial loss’ approach set out in the Employment Tribunal/GAD 2003 guidelines on compensation for loss of pension rights but by using multipliers from the Ogden tables (usually used in the civil courts for claims like personal injury) of 2007. This was because the Tribunal considered some of the financial assumptions underlying the 2003 guidelines to be out of date, e.g. that money could be invested to earn an average of 6.5 per cent per annum.
In coming to its decision the EAT noted:
- that the 2003 booklet referred to the Ogden tables being prepared by GAD to enable courts to convert a total loss of employment continuing to retirement into a lump sum; and
- that most of the authorities support the use of the Ogden tables where to use the guidelines would produce an inequitable result.
The judgment includes a useful discussion of the various approaches to pension loss and compensation.
Case report: Chief Constable of West Midlands Police v Gardner
Employment Tribunal/GAD guidelines Compensation for Loss of Pension Rights Employment Tribunals