The High Court has overturned a Pensions Ombudsman’s decision that a member had acquired pension rights in excess of those provided for in the trust deed and rules. It is a reminder of the importance of ensuring that communications with members are clear and accurate, especially where they are being asked to make important decisions on their future benefits. The result, however, should be of great comfort to trustees and employers as it is just the latest in a long line of cases which show how difficult it is for members to look behind the trust deed and rules to claim additional benefits.

In May 2010 the Pensions Ombudsman determined that Mr Weale was entitled to retain his previous (better) pension rights following a transfer. Mr W had transferred from the B Scheme to the C Scheme. His NRD under the B Scheme had been 60 and the Ombudsman held that on transfer to the C Scheme he retained the right to retire at age 60 without actuarial reduction in relation to the benefits accrued in the B Scheme. The benefits accrued during his C Scheme service were based on an NRD of 65.

The High Court held that the basis upon which the Ombudsman had determined that Mr W retained the right to draw unreduced B Scheme benefits from age 60 must either be because of estoppel, or because of a contractual right he had acquired. The High Court looked at the various announcements, letters and forms which Mr W had received. It found that there was no estoppel as no clear and unambiguous representation had been made – this decision seems largely to be based on various references in those documents to the Trust Deed and Rules taking precedence.

The Court found that Mr W did enter into a contract when he accepted membership of the C Scheme but there was no term in that contract or promise made that he would be entitled to the same benefits as he had in the B Scheme. The benefits under the C Scheme were to be determined exclusively by reference to the C Scheme’s Deed and Rules.

Basic requirements for estoppel by representation

  • A clear and unambiguous representation which is intended to be acted on  
  • The representee must have relied on the representation to his detriment