In Alexander Forbes Trustee Services Limited v Clarke, Lewis, Unwin [2008] EWHC 153, the High Court held that members of a pension scheme who were not in receipt of a pension when the scheme was wound-up, but who were entitled to bring that pension into payment through their own actions, were people whose "entitlement to payment of pension or other benefit had arisen" within the meaning of section 73(3)(b) of the Pensions Act 1995; and, hence, fell into that higher priority category on the winding-up.

Clarity was sought in relation to two categories of member of the Demaglass pension scheme, which had begun to wind-up on 23 May 2000 following employer insolvency:

  • Members over the age of 50 who had left service on 23 May 2000 and were entitled to deferred pensions, but who had not exercised any right to take a reduced pension with immediate effect; and
  • Members over the age of 50 who had not left service but were still employed by Demaglass Limited on 23 May 2000 but who had the right to take early retirement.

The Court held that if a member had a right to bring about payment of an immediate pension by taking one or more steps that lay "wholly in his own hands", then entitlement to payment of that pension had "arisen" for the purposes of the statutory priority order in section 73 of the Pensions Act 1995. Moreover, this principle applied even where the member was still in service but had to have left service in order to trigger payment of the pension. In these circumstances, it was still open to the member to leave service and then claim his or her pension. It made no difference that a member still in service and aged over 50 on the date that winding-up was triggered would have had to take two steps (that is, leaving service and then electing for an early pension) instead of a single step (electing for an early pension), in order to qualify for full payment of an immediate pension.

Neither was it essential that the member should have been able to take all the necessary steps on the winding-up date. All that mattered was that the step or steps required lay wholly in the member's hands. Hence, even where individuals have a right to call for benefits to be paid but have not exercised that right, their entitlement to pension had "arisen" for the purposes of the legislation.