FUTTER V HMRC; PITT V HMRC
The Supreme Court has rejected both appeals against the Court of Appeal’s interpretation of the rule in Hastings-Bass, holding that the Court of Appeal had correctly clarified the scope of the rule.
The Supreme Court however held that Mrs Pitt’s decision could be rescinded on the grounds of equitable mistake. It is not clear to what extent this remedy will be available in the pensions context.
LB RE FINANCING NO 1 LIMITED & OTHERS V THE TRUSTEES OF THE LEHMAN BROTHERS PENSION SCHEME & OTHERS
The Court of Appeal has upheld the High Court’s decision that the trustees of a scheme are "directly affected persons" for the purposes of the moral hazard legislation (and can therefore refer a determination of the Pensions Regulator to the Upper Tribunal).
TRUSTEES OF THE OLYMPIC AIRLINES SA PENSIONS AND LIFE INSURANCE SCHEME V OLYMPIC AIRLINES SA
The Court of Appeal has overturned the High Court’s decision that it had jurisdiction to wind up the principal employer of the Olympic Airlines pension scheme even though the employer (a Greek company) was already in liquidation in Greece.
The relevance for the pension scheme is that a Greek liquidation of the employer is not a qualifying insolvency event for PPF purposes and the scheme will not therefore be eligible for PPF entry if a UK winding up order cannot be issued.
SELDON V CLARKSON WRIGHT & JAKES
In 2012, the Supreme Court held in this case that imposition of a mandatory retirement age in a partnership could be a means of achieving the legitimate aims of dignity and inter-generational fairness, but it remitted the case back to the employment tribunal to determine whether the choice of age 65 was a proportionate means of achieving those aims such that enforcing retirement at that age did not involve unlawful age discrimination. The employment tribunal has now held that the choice of age 65 was a proportionate means of achieving the legitimate aims in question.
HOGAN V MINISTER FOR SOCIAL AND FAMILY AFFAIRS, IRELAND
The ECJ has held that Ireland has not properly transposed into Irish law an EU Directive which requires member states to take measures to protect accrued pension rights under occupational pension schemes in the event of the employer’s insolvency as members of Irish schemes are not guaranteed to receive at least 50% of their accrued benefits in the event of employer insolvency.
The decision raises the question of whether the UK is also in breach of the Directive because in some cases the PPF would not cover at least 50% of a member’s pension benefits.
WILLEY V HMRC
The First-tier Tribunal (Tax) has rejected a scheme administrator’s appeal against a scheme sanction charge which was imposed by HMRC as a result of an unauthorised employer loan being made by the scheme. Although the scheme administrator did not know that the loan had been made, the Tribunal held that the administrator should have had in place a system to identify unauthorised payments being made.
PENSIONS OMBUDSMAN ROUND-UP: CHANGE OF POSITION
Where a member has received an overpayment, they may have a defence to a repayment claim by the scheme if they can show that they have changed their position in good faith as a result of the overpayment and that it would therefore be unjust to require repayment.
Similarly, if a member has received incorrect information about the terms of their pension benefits, the scheme or employer may be obliged to provide the benefits on the incorrectly stated terms if the member can show that they changed their position in reliance on the incorrect information.
Some recent Ombudsman decisions give a flavour of what the Ombudsman may and may not consider amounts to a change of position in these circumstances.
In Wytch, the Ombudsman held that a member who received overpayments totalling just over £3,000 over a period of 5 years had changed her position by "living to her means" – ultimately the overpayment had allowed her to have a somewhat more generous lifestyle than she would otherwise have had.
In John, the Ombudsman held that a member who received overpayments from an income drawdown plan had changed his position by factoring those overpayments into his financial planning, including his decision to make a number of financial gifts to his children.
In McNicholas, the Ombudsman held that a member’s spouse who had been overpaid nearly £100,000 under a pension sharing order which had been based on an incorrect valuation of the member’s pension benefits had changed her position by relying on the incorrect valuation when negotiating her divorce settlement.
In Brand, the Deputy Ombudsman held that a member who had received clear and unequivocal albeit incorrect statements as to her retirement age over a considerable period of time had chosen to retire when she did in reliance on the incorrect information provided and that she would have been in a more favourable financial position had she received the correct information. The trustees could therefore not reduce her pension on the grounds of early retirement.
However, in Sutton, the Deputy Ombudsman held that oral and written representations to a member that his right to take early retirement at age 60 without employer consent would not be lost on a bulk transfer did not give him a right under the receiving scheme to take early retirement at age 60 without employer consent. When considered with other information provided at the time of the transfer, the representations were not sufficiently clear and unambiguous to create the right claimed by the member. Moreover, the Ombudsman was not persuaded that the member would have acted any differently in choosing whether or not to transfer had the representations not been made to him.