The issues in Safeway Limited v Newton revolved around the scheme amendment power, which allowed amendments to be made by the employer with the consent of the trustees. They had to be by deed but could be retrospective, taking effect from the date of "any prior written announcement" or "any reasonable time previous to" the date of the amending deed.

The normal pension age (NPA) under the scheme was 65 for men and 60 for women. Following the Barber decision in 1991, where the European Court held that it was unlawful to discriminate between men and women by providing benefits at different retirement ages, the employer and trustees decided, after consultation with members, to equalise NPA at 65.

In 1991 an Announcement to members, followed by a Letter, explained the introduction of an equal NPA of 65 for men and women "with effect from 1 December 1991". Formal recognition in the scheme documentation of the common NPA was in a deed dated 2 May 1996. From 1 December 1991 the scheme was operated on the footing that the NPA was equalised at 65 on that date. However, when the employer went to court for a declaration of what it thought was the position, the judge rejected the claim and decided that the NPA was not equalised at 65 until 2 May 1996.

The problem for the employer was that European law, in particular the case of Smith v Avdel in 1994, established the concept of the "Barber window" – the common retirement age has to be 60 for service from the date of the Barber decision (17 May 1990) until the date of the amending deed and "levelling down" benefits (by setting the NPA for both men and women at 65) is not allowed retrospectively for service during that window. Several years later, in Harland & Wolff, a retrospective approach to equalisation was again rejected, even though in that case it was specifically allowed under the scheme rules.

So the employer in Safeway had to show either that the judge in Harland & Wolff was wrong (a tall order, not least because the same judge was hearing this case), or that the facts were different.

The employer failed to convince the judge that he had got in wrong in Harland & Wolff, or that the law had moved on since then, but put forward two rather convoluted arguments that the facts were different:

  • The amendment power was different to that in Harland & Wolff; it allowed amendments to be backdated to the date of an announcement. Smith v Avdel said that the Barber window closed when "measures for bringing about equal treatment" had been adopted by the scheme, and the 1991 Announcement was such a "measure", even though it was not effective (without the subsequent deed) to comply with the amendment power. This was rejected. Exercise of the amendment power required a deed, so under European law, an effective alteration to close the Barber window was not made until the 1996 Deed, even though it could take effect (under UK law) from the date of the 1991 notices.
  • Equalisation at 60 happened automatically under the equal treatment provisions of section 62 of the Pensions Act 1995; the 1996 deed merely increased it to 65, retrospectively, at a time when equalisation had already taken place (so it was not a breach of European law). This was given pretty short shrift – the 1996 deed was an integral part of the equalisation process.

Comment & Actions

  • There is a large amount of money at stake here and the case is going to be appealed. This presumably explains why the case was brought, as the prospects of the employer winning seemed unlikely given a clear line of past case law. However, not least given it was the same judge who heard this case as decided Harland & Wolff, the employer may have more luck in the Court of Appeal.
  • The case illustrates that, even though it is 26 years since the Barber decision, many schemes continue to struggle with that case's implications.