EWHC 2573 (Ch)
In our November 2008 Pensions update we reported that the High Court had granted a partial buy-out application from a corporate trustee of a pension scheme in winding-up. The trustee was also permitted to delay the “applicable time” at which the employer’s section 75 debt would crystallise until after the partial buy-out had been completed. This maximised the amount payable by the company, as the scheme had started winding-up before 11 June 2003 (after which the new governing legislation would have applied), and the debt calculation was therefore based on the MFR level, rather than the full buy-out level.
The employer argued that this was an improper use of the trustee’s powers but this claim was rejected. The High Court’s decision was affirmed by the Court of Appeal in its judgment handed down on 23 July 2009.
Comment: this case highlights a way for trustees to maximise an employer’s section 75 debt by relying on the partial buy-out mechanism. However, it will be available only to schemes which started the winding-up process before 11 June 2003 and which have not yet completed it.
View the judgment.