In Duffy (80802/1), the Pensions Ombudsman held that it is maladministration for trustees not to specifically inform a member of a rule amendment that removed his right to an unreduced pension payable on redundancy. Members of the scheme in question, the Union Carbide Ltd Retirement and Benefit Scheme (the "UCL scheme") had been informed of various changes to the scheme rules by a letter from the trustees.  Later, the scheme booklet was also updated.  The ombudsman held that neither the letter nor the scheme booklet had been specific enough in relation to the changes to the redundancy rule but as Mr Duffy had not suffered a financial loss as a result, he was only entitled to an award of £50 for the inconvenience and distress he had suffered.


The determination is more interesting in relation to what are known as “Beckmann" rights. These are rights under a pension scheme to an enhanced pension on redundancy that pass on a TUPE transfer under the decision of the European Court of Justice in the case of Beckmann v Dynamco Whicheloe Macfarlane Ltd [2002] IRLR 578.  The rights in this case were the rights to take an unreduced pension if the member was made redundant between the age of 50 and 57.  These rights had been honoured by the UCL scheme, following an earlier TUPE transfer of employees from ICI to UCL and a transfer of employees' accrued benefits from the ICI pension scheme to the UCL scheme.

The UCL scheme later amended these rights as part of a package of rule changes in 2003, so that a pension taken on redundancy in these circumstances would be actuarially reduced.  Mr Duffy was subsequently made redundant at an age between 50 and 57 and was informed by the scheme trustee that, as the redundancy provision had been amended, his pension would be actuarially reduced.  Mr Duffy complained that the amendment in 2003 was not valid.

Beckmann rights may be amended later

The Ombudsman held that a Beckmann right can subsequently be removed by a rule amendment. so long as the amendment is valid under the rules of the scheme and under domestic legislation.  On the facts of the case, the Ombudsman found that the amendment had been validly made; in particular that the restriction in the scheme's amendment power that did not allow a rule change that would substantially prejudice the "interests" of non-pensioner members “in respect of contributions received by the Trustees before that date” had not been infringed.  The Ombudsman held that this restriction in the amendment power functioned to protect benefits secured by past service as at the date of the amendment and that this did not include the right to an unreduced pension on redundancy which was a future contingency and consequently not an accrued right. 


Ombudsman's determinations are binding only on the parties involved in the complaint and do not have general legal effect.  However, the determination is interesting in that it suggests that a Beckmann right can be removed by a subsequent rule amendment providing the conditions mentioned by the Ombudsman (that the amendment must be valid under the scheme rules and UK legislation) are satisfied.