The Court of Appeal has upheld the judgment of the High Court in Allied Domecq (see Pensions Update, January 2008) that the scheme actuary had unilateral power to set the contribution rate under the scheme rules without obtaining the agreement of the principal employer (Allied Domecq (Holdings) Ltd -v- Allied Domecq First Pension Trust Ltd and another [2008] EWCA Civ 1084).

The main issue was whether the rates of contribution under the scheme rules were "determined by the actuary without the agreement of the employer". If they were, then under the statutory scheme funding requirements the scheme actuary would be required to provide a special certificate confirming that the rates of contribution agreed by the trustees and employer were no lower than the rates he would have provided for if he, rather than the trustees, had the responsibility for making the decisions.

The scheme rules provided for both ongoing contributions and contributions in relation to past service deficit to be determined by the scheme actuary. In the case of ongoing contributions the trustees would then determine the respective proportion of contribution from each participating employer at such intervals as the trustees and principal employer agreed. In the case of deficit contributions the actuary would certify the proportions in which employers would pay, within such period as the trustees may, on the advice of the actuary, agree with the principal employer.

The Court of Appeal upheld the High Court's decision that both rules provided for the rates of contribution to be determined by the scheme actuary; and the special certificate would be required. The second limb of each rule was separate; so the power of the actuary to determine contributions was not affected by the right of the trustees to apportion contributions among employers or, with principal employer agreement, to set the time period for the past service deficit contributions. The appeal court held that this time period referred to payment of contributions payable by each individual employer; the period for payment of the aggregate amount payable by the employers collectively was governed by the (then) minimum funding requirement provisions of the Pensions Act 1995, with which the rule could not conflict.