The High Court has 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.
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 only be available to schemes which started the winding-up process before 11 June 2003 and which have not yet completed the process.
View the judgment.