The High Court has approved a settlement between the British Vita Unlimited and the trustees of the British Vita Pension Fund and the British Vita SE&D Pension Fund.
This means there will now be no appeal of the High Court decision in April 2007 on the interaction of scheme rules and the new statutory funding (SSF regime). Part 3 of the Pensions Act 2004 provides - for the purposes of the SSF valuation - employer and trustee agreement on funding matters where the scheme rules provide for a unilateral employer power or where the trustee has unilateral power but the employer has power to suspend contributions. In the British Vita case, Mr Justice Warren held that the new statutory SSF regime did not affect the continuation of powers of the trustees to make contribution demands under the scheme's own funding rules.
When preparing for a valuation, it will therefore be important to take advice on the precise interaction between specific scheme rules and the valuation provisions under Part 3 of the Pensions Act 2004 as schemes where the trustee or actuary has powers in relation to funding may need to effectively carry out two valuations at the same time: one under the scheme rules and one under the scheme specific valuation provisions. Dovetailing these may well be a challenge.
Uncertainty also continues in the sense that the case left open the position after the first scheme specific valuation under Part 3 of the Pensions Act 2004 because the judge did not need to decide on this point on the facts. Some employers may well consider challenging a trustee who seeks to rely on scheme powers after that first SSF valuation but it is likely to require litigation beyond the High Court to settle that matter given the clear steer from Warren J in British Vita.