Safeway has been given a glimmer of hope that its attempts to equalise retirement ages for men and women in 1991 were effective. The Court of Appeal has referred a question to the European Court of Justice (ECJ) in a recent appeal by the supermarket chain[1].

What was the case about?

The case relates to the purported equalisation of retirement ages by a written member announcement in 1991. The amendment power in the Safeway scheme rules provided for amendments to be made by deed, but it permitted retrospective amendments and, in particular, that any amendment could take effect from the “date of any prior written announcement”. A supplemental deed was later entered into in May 1996, confirming the changes set out in the announcement.

In the High Court Mr Justice Warren held that retirement ages had not been equalised until May 1996 and that European law did not allow the change to be backdated to 1991. If retirement ages were not equalised until 1996 this would add approximately £100m to the scheme’s liabilities. See our previous blog for more details about the facts and the High Court decision.

What were the issues for the Court of Appeal to consider?

The first issue was whether the amendment power could be construed as allowing it to be exercised by a written announcement. The Court of Appeal agreed with the High Court’s decision that the amendment power in the trust deed and rules could only be exercised by deed and not by written announcement. The Court commented that the language used in the scheme’s amendment power was “unmistakeable”. The amendment power defines the single means whereby the provisions of the scheme may be altered, which is by deed.

The second issue was, if the scheme’s amendment power was only exercisable by deed, could retrospective amendments be made in respect of equalisation where (pursuant to the scheme’s rules) a prior announcement was issued, or was this prohibited by the equal treatment principle established by EU law. In the High Court Warren J’s view was that previous equalisation cases[2] had clearly established that benefits could not be levelled down (i.e. by raising normal pension age for women from 60 to 65) retrospectively and that the position was sufficiently clear that he did not need to refer the matter to the ECJ.

The Court of Appeal did not agree that the position under EU law was clear. Rather than ruling on this point it has instead referred the matter to the ECJ.

Why did the Court refer the question to the ECJ?

One argument put forward by Safeway was that, although benefits could not be levelled-down retrospectively, because the amendment power allowed amendments to be backdated to the date of an announcement this meant that any right which women had to a pension age of 60 could be taken away by with effect from the date of an announcement prior to the deed of amendment (i.e. at any time between 1991 and 1996, if a woman had claimed an entitlement to a pension age of 60, the employer and trustees could have executed a deed confirming the effect of the 1991 announcement). The argument followed that, if any right of women to a pension age of 60 could be taken away by a deed (as was subsequently done) there was no unequal treatment of men and women in that period. The uncertainty is whether for the purpose of the equal treatment principle, women’s defeasible rights should be treated as indefeasible during the Barber window (the period from 17 May 1990 until the scheme equalised benefits).

Another issue to be considered is how the UK legislation[3] that implemented the principle of equal treatment applies. However, the Court of Appeal felt that it could not properly address this issue without first having a ruling on the position under EU law.

How will this impact other schemes?

The amendment power in this case is relatively unusual (though we have seen similar wording in other schemes’ rules) so the outcome may be of limited impact. But, if the ECJ rules that it was possible to backdate this change to the date of the announcement, other schemes where there was a delay between the decision to equalise and the completion of the necessary formalities might want to revisit this issue. As ever the key will be in the specific wording of each scheme’s amendment power.