In Barton the Ombudsman considered the effect of a restriction in the amendment power of the SAB WABCO Pension Scheme. This provided that no amendment could be made which, in the opinion of the actuary would: "reduce the aggregate value of the retirement benefits payable under the Scheme to any Member ... in respect of contributions already received by the Trustees" [except with member consent].
The Scheme was closed to future accrual from 30 September 2005 and active members were advised that they would be treated as leavers (and, therefore, as deferred members) from the date of closure; and also that benefits would be based on earnings and service to that date. The scheme amendment which gave effect to the closure provided that current active members would cease to be within the definition of "Eligible Employees" and would leave the scheme.
However, Mr Barton argued that the amendment power restriction effectively prevented the trustees from using his earnings at the date of closure in the calculation of his pension; instead he argued that the trustees were obliged to use his pay as at the date of his actual retirement.
However, the Ombudsman concluded that the scheme rules did not allow the trustees to apply future pay to benefits accrued to 30 September 2005 and that the trustees were correct to use Mr Barton's salary as at 30 September 2005 as his final pay. The Ombudsman dissected the scheme rules in basic terms: the employer and trustees could amend the scheme; they provided that if a member stopped being an "Eligible Employee", he or she left service and became a deferred member; they further provided that this deferred pension must be calculated by reference to pensionable service and final pensionable pay, defined as the pay leading up to leaving the scheme.
This is a surprising result, especially given the similarities of the amendment restriction with that in the Courage case (and also with that in the recent IMG case). In Courage it was held that a prohibition on amendments which may reduce benefits secured by contributions already paid acted to protect a benefit to which the member was prospectively entitled. This view has also found recent support in the IMG case.