“[5] . . . At the risk of covering a lot of familiar ground and stating the obvious, it seems to me that, when the court has to adjudicate on a course of action proposed or actually taken by trustees, there are at least four distinct situations (and there are no doubt numerous variations of those as well). (1) The first category is where the issue is whether some proposed action is within the trustees' powers. That is ultimately a question of construction of the trust instrument or a statute or both. The practice of the Chancery Division is that a question of that sort must be decided in open court and only after hearing argument from both sides. It is not always easy to distinguish that situation from the second situation that I am coming to… (2) The second category is where the issue is whether the proposed course of action is a proper exercise of the trustees' powers where there is no real doubt as to the nature of the trustees' powers and the trustees have decided how they want to exercise them but, because the decision is particularly momentous, the trustees wish to obtain the blessing of the court for the action on which they have resolved and which is within their powers. Obvious examples of that, which are very familiar in the Chancery Division, are a decision by trustees to sell a family estate or to sell a controlling holding in a family company. In such circumstances there is no doubt at all as to the extent of the trustees' powers nor is there any doubt as to what the trustees want to do but they think it prudent, and the court will give them their costs of doing so, to obtain the court's blessing on a momentous decision. In a case like that, there is no question of surrender of discretion and indeed it is most unlikely that the court will be persuaded in the absence of special circumstances to accept the surrender of discretion on a question of that sort, where the trustees are prima facie in a much better position than the court to know what is in the best interests of the beneficiaries.”
“[7] There is one other matter which I should refer to at this stage. That is the threshold test for the provision of the court's blessing under category (2). The test is whether it can be said that in reaching its decision to implement the proposal, the trustee has taken into account irrelevant, improper or irrational factors, or whether it has reached a decision that no reasonable body of trustees properly directing themselves could have reached. See Sir Richard Scott V-C in Edge v Pensions Ombudsman[1998] Ch 512 at 534B to H as approved by the Court of Appeal at[2000] 3 WLR 79 at 100H to 103E. The court must also be satisfied that the trustee has in fact formed the opinion that it would be desirable to implement the proposal. . . .”
“The legal background 12 In Public Trustee v. Cooper[2001] WTLR 901 , Hart J repeated Robert Walker J's now well-known categorisation of cases in which trustees may seek the approval of the court. These proceedings fell into the second of Robert Walker J's categories (see page 923 in Cooper), namely where there is no real doubt as to the nature of the trustees' powers and the trustees have decided how they want to exercise them “but, because the decision is particularly momentous, the trustees wish to obtain the blessing of the court for the action”
“Although the basic tests that the court will apply in dealing with an approval application have not been much in dispute, the argument revealed an important difference of approach between the two sides. In essence, it was as to the circumstances in which the court might approve a transaction when expert advice had been followed by the trustees. Mr Cooper’s argument was that the expert advice that the trustees received raised a number of questions that ought to prevent the court approving the intended sale, whereas Ms Penelope Reed QC, counsel for the trustees, and Mr Christopher Tidmarsh QC, counsel for the 1987 trustees, submitted that if the trustees received and followed expert advice, they should not be required to second-guess it and the court should not withhold its approval. As will appear in due course, I think it is important to distinguish carefully between allegations that trustees have not fulfilled their duties to the beneficiaries, and allegations that trustees’ professional advisers have acted in breach of their duties to the trustees.”
"EACH Participating Employer shall contribute 8% of aggregate Pensionable Salaries, of the Members in his employment or such other rate as may be decided by the Trustees on the advice of the Actuary."
"If, as a result of the Actuary's report, it shall appear that there is a deficiency or anticipated deficiency in the Scheme's resources, the Trustees shall consider what if any action, having regard to any recommendations made by the Actuary in his report, should be taken either by way of increasing contributions or decreasing benefits to render the Scheme solvent. If necessary, the Trustees shall take such steps as are hereinafter laid down for amendment of this Deed and the Rules, or if the deficiency or anticipated deficiency cannot be made good, for the winding up of the Scheme."
"31.0 THE trusts hereby constituted shall continue unless and until: (i) determined by a resolution to determine the Scheme passed by the Trustees in accordance with the Trust Deed; or (ii) there be a deficiency or anticipated deficiency in the Scheme's resources with no agreed measures acceptable to the Participating Employers and approved by the Actuary for overcoming that deficiency."
“i. it believed that making an MNOPF-style amendment would be in the members' interests insofar as increasing the pool of Participating Employers which could be required to make contributions has a positive effect on the strength of the overall covenant; and ii. it was noteworthy that the majority of the Scheme's liabilities related to ratings' service with Historic Employers.”
"The provisions of the Trust Deed or of the Rules may be varied or added to in any way by Deed executed under the seal of the Trustees. Every such variation must first be approved by a majority of the full number of Participating Employers’ representatives and also a majority of the full number of the Members’ representatives serving as Trustees or as Directors on the Board of any Corporate Trustee which approval may be signified either by a resolution passed by such majorities or by an instrument in writing signed by such majorities PROVIDED that no variation or addition shall be made which: (a) would have the effect of changing the main purposes of the Scheme, namely the provision of pensions for Members on retirement; or (b) would operative in a way to diminish or prejudicially affect the rights in respect of any Member annuitant or other beneficiary already earned; unless the Actuary shall advise that no other course is reasonably practical having due regard to the interests of all persons interested in the Scheme; or (c) would be contrary tothe principle that the ParticipatingEmployers and the Members shall be equally represented on the Board of the Corporate Trustee of the Scheme; or (d) would contravene the requirements of sections 67 to 67I of the 1995 Act."
“This method is a practical approach balancing reasonable accuracy against cost and complexity. Although it still has some shortcomings, these seem very unlikely to be sufficiently serious to warrant using a more costly and time consuming approach.”
“A full “benefits based” apportionment would be slow and costly to implement and we expect that the apportionment of liabilities under this method would not differ significantly from the apportionment based on Method C.”
“Mrs James provided the Board with a summary of Mayer Brown’s report included under Appendix D. ... Mr Tennet had advised that the primary duty of the Trustee is to the members of the Fund. The Trustee does not owe any freestanding legal duty to Participating Employers to treat them “fairly”
“ . . . it seems likely that prospective Augmentation would result in day to day affordability of contributions at least as good as the Fund currently enjoys.”
"(a) to ensure that MNRPF has sufficient assets to pay benefits as and when they fall due for the lifetimes of all current and future pensioners and (b) to achieve fairness as between the employers (current employers and former employers alike)."
“Leading Counsel said that the papers provided the Trustee Board with appropriate information to enable it to consider the decisions which it is proposed shall be taken regarding the introduction of a new deficit contribution regime. Although the papers included considerable detail, they did not point towards a “right” answer – indeed, it would be inappropriate for the Trustee’s advisers to propose a “right” answer in relation to the decisions to be made by the Trustee Board – the issues are ultimately questions of principle to be decided upon by the Trustee Board appropriately weighing up the relevant matters.”
“148 Those Non-P&O Debt Employers who agreed to make voluntary payments are in my judgment in no different position from those who refused. The representations made by the Trustee were the same to all the non-P&O Debt Employers, and I do not consider that the Trustee's silence after a refusal to incur a contractual liability can form the basis of a convention estoppel against the Trustee, whether or not a particular non-P&O Debt Employer then decided or declined to make voluntary payments on a purely ex gratia basis. In any event, it is and always has been part of the case of the Current Employers that any extension of contribution liability to those employers who made voluntary payments could only properly be on the basis of giving full credit for those payments, against any contribution liability thereafter imposed. That would in my judgment be an amply sufficient remedy to satisfy any unfairness or injustice which might otherwise have been caused by the Trustee's resiling from the alleged convention, if it had been established. . . . . . . . . . . . 154 So far as concerns detrimental reliance, I have already concluded that the P&O Debt Employers did not on their own have an Old Rule 31 veto which they could deploy as a bargaining counter for the purpose of obtaining a permanent discharge from further contribution liability. As for their very substantial voluntary payments, their remedy if any convention estoppel had been established between them and the Trustee would, as I have already stated, be to have those payments credited against any future obligation, as the Current Employers already propose. . . . . . 157 By an amendment made shortly before the hearing, Stena sought an additional declaration, to the effect that, if entitled to amend by the introduction of a new Rule 5.3A, it would, in the events which have happened be a proper exercise of that power to do so, such that the Trustee should be authorised to do so.”
“. . . . Consideration of the impact of the new regime on the solvency of the Scheme will necessarily involve an assessment of the impact on the strength of the overall employer covenant. Leading Counsel acknowledged that Participating Employers are not interchangeable in terms of covenant strength, and the way (and extent to which) the new regime allocates deficit contributions between them may affect the strength of the overall employer covenant. It is difficult to see how the Trustees could properly introduce a new regime if the Trustee has received advice that it would significantly reduce the strength of the overall employer covenant.”
“ . . . the Trustee must act in the best interests of the Members overall, as opposed to in the interests of any third party with whom the Trustee or a director of the Trustee has an affiliation. In taking any decision, the trustee directors should therefore put on one side the fact that they are employed by a particular Participating Employer.”
“The key points discussed were (by reference to the five matters identified for consideration in the adviser papers): 3.1 Purpose of the Fund It was acknowledged that the main purpose of the Fund is to provide members with the promised benefits set out in the Trust Deed and Rules. It was felt that all the options under consideration in relation to a new deficit contribution regime (including retaining the current regime) were consistent with the purposes of the Fund. 3.2 Cross subsidy between Participating Employers It was acknowledged that substantial cross-subsidy between Participating Employers had arisen as a direct result of not all of the Participating Employers paying deficit contributions under the current regime. The Board considered the information about that cross-subsidy contained in the Towers Watson paper and in particular the table in paragraph 1.13 which showed the deficit contribution cross-subsidy that had arisen since 2001, and the extent to which that cross-subsidy could be addressed by reapportionment over various periods back to 2001. It was recognised that benefits payable under the Fund could be characterised as deferred pay which members have earned through employment with one or more Participating Employers. However, it was also recognised that the current regime was agreed by the RMT, by the Chamber of Shipping and by Current Employers, was approved by the Court and remained valid. Using reapportionment to reduce past cross-subsidy under the current regime could be said to be “undoing” or “re-doing” a regime which has been in place since 2001. As a matter of principle it was felt appropriate to seek to reduce the cross-subsidy under the current regime with the aim that, broadly, each Participating Employer is responsible for paying deficit contributions in respect of benefit liabilities which are attributable to members’ employment with that Participating Employer. However, it was also important to weigh this up against the impact on the overall employer covenant. 3.3 Employer covenant strength The Board considered the Lincoln International advice on the existing employer covenant and on the effect on the overall employer covenant of addressing cross-subsidy through augmentation or reapportionment (whether back to 2001, 2007 or 2010), having regard to the various classes of Participating Employer. It was noted that the broad conclusions of the Lincoln International employer covenant advice were the same whether the Fund was open or frozen for the purposes of the employer debt legislation. It was acknowledged that it was not necessary for the open/frozen issue to be resolved for the purposes of the decisions to be taken at the meeting in relation to the introduction of a new regime. Lincoln International’s advice was that augmentation under the new regime was likely at least marginally to enhance the employer covenant. Lincoln International’s advice was that reappointment under the new regime (whether it went back to 2001, 2007 or 2010) was of itself likely to have a negative impact on the employer covenant. However, Lincoln International also advises that if an appropriate implementation methodology was used for reapportionment (whether it went back to 2001, 2007 or 2010) it was likely at least to maintain the employer covenant. Lincoln International on some of the options for an implementation methodology as set out in their paper “Implementation Methodology Considerations”. 3.4 Downside risks The Board was concerned that non-collection of contributions would be a downside risk under a new regime. It was acknowledged that non-collection is already a risk under the current regime. Towers Watson explained that the risk could increase if there was augmentation of the pool of employers which can be required to pay deficit contributions under the new regime because the augmented pool would include employers which have never before been asked to pay deficit contributions and a material proportion of whom were assessed as providing a fairly weak covenant. The risk would further increase if there was reapportionment as well as augmentation because the size of the deficit contributions being imposed on employers which have never before been asked to pay and whose covenant was assessed as fairly weak would be increased in order to make allowance for contributions which had been already paid by Current Employers (and, depending on the period of reapportionment, by, Voluntary Employers). It was acknowledged that unwillingness to pay could be another downside risk under a new regime. It was recognised that the greater the deficit contributions which the Historic Employers are asked to pay, the greater the likelihood of there being unwillingness on their part to pay. Reapportionment would not only result in greater deficit contributions being apportioned to the Historic Employers but it may also increase unwillingness to the extent that it is perceived to be unreasonable because it is “un-doing” or “re-doing’ a regime which has been in place since 2001. But not reapportioning could result in unwillingness amongst the Current Employers to continue paying. Lincoln International explained that the extent of this risk could only be fully tested once a new regime is in place and employers have been approached. They also explained that the Pensions Regulator had moved away from previous statements about the significance of willingness in assessing employer covenant. Rather the Pensions Regulator was focussing more closely on an employer’s legal commitments to support a pension scheme. In this regard, it was noted that Participating Employers will be under a legal obligation to pay whatever deficit contributions are due under any validly introduced regime. However, the view was expressed that unwillingness was still a downside risk in practice - particularly if a Participating Employer could not itself pay its contributions without support from the wider corporate group in which it resides. Lincoln International advised that downside risks which would potentially arise under a new regime, whether through augmentation or reapportionment, could be mitigated through the use of an appropriate implementation methodology as explained in their paper “Implementation Methodology Considerations”
"Mr Nugee has acknowledged that Participating Employers are not interchangeable in terms of covenant strength, and the way (and extent to which) the new regime allocates deficit contributions between them may affect the strength of the overall employer covenant. Mr Nugee said that it is difficult to see how the Trustee Board could properly introduce a new regime if the Trustee Board has received advice that it would significantly reduce the strength of the overall employer covenant."
"It is likely that the employer covenant will be sufficient to fully fund the pensions obligations"
“The starting point is the duty of trustees to exercise their powers in the best interests of the present and future beneficiaries of the trust, holding the scales impartially between different classes of beneficiaries. This duty of the trustees is paramount. They must, of course, obey the law; but subject to that, they must put the interests of their beneficiaries first. When the purpose of the trust is to provide financial benefits for the beneficiaries, as is usually the case, the best interests of the beneficiaries are normally their best financial interests.” . . . . . . I reach the unhesitating conclusion that the trusts of pension funds are in general governed by the ordinary law of trust, subject to any contrary provision in the rules or other provisions which govern the trust. In particular, the trustees of a pension fund are subject to the overriding duty to do the best that they can for the beneficiaries . . .”
“Some of the evidence filed by the defendants tended to show that the prohibitions [i.e. the proposed investment restrictions] would not be harmful to the beneficiaries, or jeopardise the aims of the fund and that some pension funds got along well enough without any overseas investments. Such evidence misses the point. Trustees must do the best they can for the benefit of their beneficiaries, and not merely avoid harming them. . . . .”
“ . . . . (1) in a trust to provide financial benefits the trustees have a duty to secure the best financial interests of the trust within the law in accordance with the trust purposes; (2) in such trusts the foregoing duty includes a duty to invest the trust assets to the best financial advantage; (3) as part of that duty the trustees have a duty not to fetter their investment discretion by ab ante decisions; (4) the duty not to fetter investment discretion includes in particular a duty not to fetter it for reasons extraneous to the trust purposes, including matters of political or moral judgment as distinct from financial or economic judgment (though these may interconnect or overlap); and (5) if the trustees do apply an ab ante policy – whether general or particular – they do not protect themselves from breach of trust by considering which substitute investment will serve the trust as well or better than the original.”
“ . .. that the imposition of a duty to act in the best interests of the members in ss601FC(1)(c) and 601FD(1)(c) does not extend its content beyond previously understood general law boundaries. I see the best interest duty as foundational and operating in combination with other duties.”
"The matters to which we have referred are not to be taken as an exhaustive or a prescriptive list. It is likely that, in most circumstances, pensions trustees who fail to take those matters into account will be open to criticism. But there may well be other matters which are of equal or greater importance in the particular circumstances with which trustees are faced. The essential requirement is that the trustees address themselves to the question what is fair and equitable in all the circumstances. The weight to be given to one factor as against another is for them."
"It became apparent early on in the submissions of Mr Nugee QC on behalf of the Company that even if, on the true construction of the Scheme, the trustee has prima facie an unfettered power to augment benefits, the Company would wish to contend that those powers should not be exercised on a narrow basis, having regard only to the interests of the members and other beneficiaries. I was referred to various authorities, including the decision of the Court of Appeal in Edge v Pensions Ombudsman(2000) Ch 602 ,(1999) 4 All ER 546 , as supporting a requirement for the trustee to exercise its powers so as to further the purposes of the Scheme as a whole, thereby bringinginto consideration the legitimate interests and expectations of employee and employer alike. At the highest level of generality I doubt whether this statement of principle is likely to attract dissent from any of the parties represented before me. . . “ At [31], Patten J went on: "
"101 That is not to say that, if the trustees had happened to notice a feature of the rules (like rule 3.5.2.1 ) which appeared to be unintentionally onerous upon PFPL, they (the trustees) would have been obliged to keep quiet about it. If they thought that something had gone wrong in the drafting to the detriment of PFPL though not of members of the scheme, they were fully entitled to draw it to PFPL's attention. Mr Newman has said, in his written reply to Mr Stallworthy's submissions that "no decision of the trustees should be made without the employer's interests being considered and taken into account"
“For all that trustees ought not to disregard the impact on the employer of something which they contemplate doing . . . . it must surely be accepted that the trustees are in place essentially to look after the interests of the members of the scheme, not of the employer.”
"If, as a result of the Actuary's report… it shall appear that there is a deficiency or anticipated deficiency in the Scheme's resources, the Trustees shall consider what if any action, having regard to any recommendations made by the Actuary in his report, should be taken either by way of increasing contributions or decreasing benefits to render the Scheme solvent. If necessary, the Trustees shall take such steps as are hereinafter laid down for amendment of this Deed and the Rules, or if the deficiency or anticipated deficiency cannot be made good, for the winding up of the Scheme."
"50 The answer to Mr Nugee's points about possible unfairness [to a certain class of employers] is that the Trustee is given a discretion under Rule 29.2 as to how to deal with the problem of a deficiency, and it can exercise that discretion in a way which takes into account any well-founded arguments [from those employers] that the imposition of liability for additional contributions would be either unjust or disproportionate."
"Secondly, in deciding that the appellant was 'in effect expecting the members to meet part of the employer’s obligation' and that this could not 'be said to be acting in the best interests of the members', it was submitted that the Ombudsman had overlooked the fact that in exercising its discretion over surplus the trustees were not bound solely to consider the interests of the members, but were entitled and indeed bound to consider the interests of the employers as well: indeed, if its obligation were solely to consider the interests of the members it was difficult to see how any surplus could have been allowed to be returned to the employers at all…. In my judgment those criticisms of the ombudsman's determination are justified … the essential question was how much of the surplus should be used to augment members' benefits and how much should be allowed to go to the employers."
"Benefit and best interests are really interchangeable expressions. Both have a wide and elastic but not unlimited meaning. In this context, each requires an examination of the object with which the trust was established. To decide whether a proposed course is for the benefit of the beneficiaries or is in their best interests, it is necessary to decide first what is the purpose of the trust and what benefits were intended to be received by the beneficiaries. Thus, to define the trustee's obligation in terms of acting in the best interests of the beneficiaries is to do nothing more than formulate in different words a trustee's obligation to promote the purpose for which the trust was created. "
“… the settled principles of the law upon this subject must be upheld, namely, that the donee, the appointor under the power, shall, at the time of the exercise of that power, and for any purpose for which it is used, act with good faith and sincerity, and with an entire and single view to the real purpose and object of the power and not for the purpose of accomplishing or carrying into effect any bye or sinister object . . .”
“Where, then, the trust though expressed as a purpose is directly or indirectly for the benefit of an individual or individuals, it seems to me that it is in general outside the mischief of the beneficiary principle.”
“ . . . At the risk of stating the obvious, that “main purpose” rule embodies three concepts which are fundamental to a pension scheme of this nature. First, the purpose of the scheme is to provide the retirement and other benefits to which the members, pensioners and dependants are entitled under the rules. . . . The scheme is not set up as a unit trust, under which the member would be entitled to a proportionate share in the fund. . . .. . .. .Third, the task of the trustees is to maintain a balance between assets and liabilities valued on that actuarial basis; so that, so far as the future can be foreseen, they will be in a position to provide pensions and other benefits in accordance with the rules throughout the life of the scheme.”
“They must, for example, always have in mind the main purpose of the scheme – to provide retirement and other benefits for employees of the participating employers. They [the trustees] must consider the effect that any course which they are minded to take will have on the financial ability of the employers to make the contributions which that course will entail. They must be careful not to impose burdens which imperil the continuity and proper development of the employers' business or the employment of the members who work in that business. The main purpose of the scheme is not served by putting an employer out of business.”
“Properly understood, the so-called duty to act impartially—on which the ombudsman placed such reliance—is no more than the ordinary duty which the law imposes on a person who is entrusted with the exercise of a discretionary power: that he exercises the power for the purpose for which it is given, giving proper consideration to the matters which are relevant and excluding from consideration matters which are irrelevant. If pension fund trustees do that, they cannot be criticised if they reach a decision which appears to prefer the claims of one interest—whether that of employers, current employees or pensioners—over others. The preference will be the result of a proper exercise of the discretionary power.”
“…must … be confined to such [uses] as can reasonably be considered to have been within the contemplation of the parties when the [deed] was made, having regard to the nature and circumstances of the [deed].” (Authorities in the line of Hole vGarnsey [1930] A.C. 472)”
“It is important to avoid unduly fettering the power to amend the provisions of the scheme, thereby preventing the parties from making those changes which may be required by the exigencies of commercial life. This is particularly the case where the scheme is intended to be for the benefit not of the employees of a single company, but of a group of companies”
“The rules of a pension scheme must be interpreted in a practical and purposive way. The fiscal background is also of importance. The ultimate question is what the words of the Scheme would mean to a reasonable reader with the background knowledge of the parties.”
“145 The starting point is that clause 7(i) of the 1977 Deed neither expressly permits nor expressly prohibits amendments with retrospective effect. The question therefore is whether clause 7(i) should be interpreted as permitting the amendments made by the 1992 Deed with effect from an earlier date. 146 It is common ground that the correct approach to answering this question is that laid down by Lord Walker of Gestingthorpe giving the judgment of the Privy Council in Bank of New Zealand v Board of Management of the Bank of New Zealand Officers' Provident Association[2003] UKPC 59 , [2003] OPLR 281 at [26]: “In the courts below the Board of Management's power to make a retrospective amendment was dealt with as a separate topic. But before their Lordships it was rightly conceded that this topic is merely a reflection of, or another (and possibly less helpful) way of putting, what is essentially the same point as to the scope of the power of amendment. Modern authority (as reviewed and summarised by Lord Mustill in L'Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co Ltd[1994] 1 AC 486 , 524–525) has recognised that when the law raises a presumption against the retrospective operation of an enactment or a disposition (including a rule change), it is concerned with fairness in the circumstances of the particular case, rather than with the application of some general formula. In the amendment of pension scheme rules, back-dating (that is, deeming a change of the rules to have been made at a date earlier than the date of the actual change) cannot be used as a device so as to rewrite history or validate an amendment which would otherwise be beyond the scope of the power of amendment. But if the substance of what is proposed is within the power, back-dating will not by itself lead to invalidity (whether it will be more or less helpful, simply as a matter of drafting technique, will depend on the circumstances).” 147 The Employers contend that the touchstone identified by Lord Walker is that of fairness, and that there is nothing unfair about the 1992 Deed having effect from1 January 1992 since that is what all concerned expected to happen and thought had happened, and it was only a result of an administrative delay in executing the documents that the 1992 Deed was not executed until after1 January 1992 . 148 While I have some sympathy with that argument, I find myself unable toaccept it. It is clear from Lord Walker's reasoning that the mere fact that an amendment is back-dated is not objectionable. In the present case, however, the amendment is not merely back-dated, it has truly retrospective effect. Thus the active members' defined benefit rights which accrued between1 January 1992 and3 March 1992 were not even converted into defined contribution rights. Instead the Plan proceeded as if the members' entitlement during that period had accrued on a defined contribution basis. In my judgment that is outside the power conferred by clause 7(i) for two reasons. First, it amounts to an attempt to re-write history. Secondly, it is barred by the Fetter.”
“There must surely be some limits. It cannot be right that whenever trustees do something which they later regret and think that they ought not to have done, they can say that they never did it in the first place.” “In the courts below the Board of Management's power to make a retrospective amendment was dealt with as a separate topic. But before their Lordships it was rightly conceded that this topic is merely a reflection of, or another (and possibly less helpful) way of putting, what is essentially the same point as to the scope of the power of amendment. Modern authority (as reviewed and summarised by Lord Mustill in L'Office Cherifien des Phosphates v Yamashita-Shinnihon Steamship Co Ltd[1994] 1 AC 486 , 524–525) has recognised that when the law raises a presumption against the retrospective operation of an enactment or a disposition (including a rule change), it is concerned with fairness in the circumstances of the particular case, rather than with the application of some general formula. In the amendment of pension scheme rules, back-dating (that is, deeming a change of the rules to have been made at a date earlier than the date of the actual change) cannot be used as a device so as to rewrite history or validate an amendment which would otherwise be beyond the scope of the power of amendment. But if the substance of what is proposed is within the power, back-dating will not by itself lead to invalidity (whether it will be more or less helpful, simply as a matter of drafting technique, will depend on the circumstances).”
"…ceases to be a person employing persons in the description of employment to which the scheme relates at a time when at least one other person continues to employ such persons, immediately before he so ceases . . "
"(a) an employer has ceased to employ at least one person who is an active member of the scheme, and (b) at least one other employer who is not a defined contribution employer continues to employ at least one active member of the scheme"
“…whether, if the occurrence of a Rule 4 Cessation triggered a section 75 debt (or would have triggered such a debt but for there being no deficit in the MNRPF on the applicable valuation basis), the “Current Employer’s Percentage” of the affected C2 Employer falls to be re-allocated amongst the remaining Current Employers under Rule 5.5 of the Current Rules or the 2001 Rules with the result that the C2 Employer has a zero percentage for the purposes of Rules 5.2 and 30 of those Rules”
“…if the “Current Employer’s Percentage” of the C2 Employer did fall to be so re-allocated and thus resulted in it having a zero percentage for the purposes of Rules 5.2 and 30 of those Rules: i) a declaration that the C2 Employer nevertheless can and may be included within the new contribution regime referred to at paragraph 1 above thereby increasing its percentage from zero; ii) a declaration as to whether the C2 Employer may (subject to the suspension currently in place) withdraw from the MNRPF under Rule 30 of the Current Rules, and if so on what terms as to the premium, transfer payment and transfer of liabilities under Rules 30.3 to 30.7.” i) a declaration that the C2 Employer nevertheless can and may be included within the new contribution regime referred to at paragraph 1 above thereby increasing its percentage from zero; ii) a declaration as to whether the C2 Employer may (subject to the suspension currently in place) withdraw from the MNRPF under Rule 30 of the Current Rules, and if so on what terms as to the premium, transfer payment and transfer of liabilities under Rules 30.3 to 30.7.”
““Schedule of Contribution” means the schedule decided from time to time by the Trustees after taking advice from the Actuary and consulting the Current Employers, setting out the rates of contributions required to be paid by the Current Employers.” . . . . . “Rule 5.6 Current Employer’s Percentage unlikely to be recoverable 5.6 If the Trustees (with the approval of the majority of the full number of the Participating Employers’ representatives and also a majority of the full number of the Members’ representatives serving as Trustees or as Directors of the Board of any Corporate Trustee) are satisfied that any future amounts likely to fall due under the Schedule of Contributions from a Current Employer are unlikely to be recoverable without incurring disproportionate cost or within a reasonable time, the Trustees may re-allocate part or all of that Current Employer’s Percentage amongst the remaining Current Employers in proportion to their Current Employer’s Percentages as in force immediately before the reallocation.”
“(1A) In the case of a scheme in relation to which there is more than one employer, the amount of the debt due from each employer shall, unless the scheme provides for the total amount of the debt due under subsection (1) to be otherwise apportioned amongst the employers, be such proportion of that total amount as, in the opinion of the actuary after consultation with the trustees or managers, the amount of the scheme’s liabilities attributable toemployment with that employer bears to the total amount of the scheme’s liabilities attributable to employment with any of the employers.”
“534. The question then arises about precisely what groups of employees are covered by the key phrase other than active members who are clearly included on any view. I can put the question this way: is it enough to prevent an ECE occurring in relation to the Scheme that the employer employs a person who falls in one of the following descriptions, and if so which? The descriptions are: (a) a person eligible to become a member as of right; (b) a person who requires the consent of the Trustee to be a Member; (c) a deferred Member; (d) a pensioner Member; (e) a person whom the employer is intending to employ and who will, upon employment, be eligible to join the Scheme.” . . . . . 540 [Mr Tennet says]. . . . a. The key phrase focuses on the nature of the employment rather than just the identity of the employer. This, he says, might be thought to connote at the very least a requirement that the employee in question be eligible to join the scheme so that (for example) employment once the scheme was closed to future accrual would not count and would no longer be ‘employment to which the scheme relates’, any more than employment with the same employer before the scheme was set up would be. He is probably right to say what he does about a scheme which is closed to further accrual. But it is not because there is no longer any employment to which the scheme relates (which is true but not relevant); rather it is because there is no longer any description of employment to which the scheme relates.” . . . . 549. In my judgment, the issue is one of eligibility. If an employee has a present right, without the consent of the trustees, the employer or any other person, to join the scheme, his employment is one of a description to which the scheme relates…” a. The key phrase focuses on the nature of the employment rather than just the identity of the employer. This, he says, might be thought to connote at the very least a requirement that the employee in question be eligible to join the scheme so that (for example) employment once the scheme was closed to future accrual would not count and would no longer be ‘employment to which the scheme relates’, any more than employment with the same employer before the scheme was set up would be. He is probably right to say what he does about a scheme which is closed to further accrual. But it is not because there is no longer any employment to which the scheme relates (which is true but not relevant); rather it is because there is no longer any description of employment to which the scheme relates.” 395. Warren J went on to hold that a present right subject to trustee consent would suffice for eligibility purposes also. “560. Issue 26: Ceasing to employ an active Member prior to6 April 2008 did not trigger an ECE if the ECHA in question employed at least one person eligible to become a Member with or without requiring the consent of the Trustee under ... the Rules. It was not enough to prevent an ECE occurring that the ECHA in question continued to employ at least one person who was either a deferred Member or a pensioner Member nor that it might, in the future, employ a person eligible to become a Member.”
"Where long-service benefit is related to a member's earnings at, or in a specified period before, the time when he attains normal pension age, short-service benefit must be related, in a corresponding manner to his earnings at, or in the same period before the time when his pensionable service is terminated."
“There was some dispute whether “benefits already secured by past contributions” means the same thing, or includes the prospective entitlement to pensions based on final salary. In the absence of express definition, I see no reason to exclude any benefit to which a member is prospectively entitled if he continues in the same employment and which has been acquired by past contributions, and no reason to assume that he has retired from such employment on the date of the employer’s secession when he has not. The contrary argument places a meaning on “secured” and “accrued” which is not justified.”
“Active Member” means a Member who is an Active Member for the time being under Rule 4 and “Active Membership” shall be construed accordingly. . . . . . . “Deferred Pensioner” means a Member with an entitlement to benefits who is not a Pensioner or an Active Member . . . . . . “Member” means a person who has been admitted to Membership of the Scheme in accordance with the Rules and “Membership” shall be construed accordingly. No person shall become a Member on or after the Closure Date. . . . . . . . “Pensioner” means a Member in receipt of pension out of the Fund or who would have been in receipt of such a pension had he not commuted the whole of his pension for a lump sum.”
“3. Schedule of Contributions” “The objective of the initial schedule will be to set contributions at a rate in excess of that which the Actuary calculates on the so-called "equity-gilt”
“A Current Employer will not cease to be responsible for its share of the shortfall if it ceases to employ eligible Ratings. Its liability to contribute to the Fund would be reduced so as to allow for any payments made by it undersection 75 of the Pensions Act 1995 ” and: “If a Current Employer withdraws from the closed Fund (as described below), the remaining Current Employers will have their percentage shares adjusted pro rata to reflect the withdrawal.”
“Where section 75 or section 75A of the 1995 Act applies to a Current Employer...that Current Employer’s Percentage shall be re-allocated amongst the remaining Current Employers in proportion to their Current Employer’s Percentages immediately before section 75 or section 75A started to apply to that Current Employer” and in Rule 30.8 in relation to Withdrawal: “...the Withdrawing Employer’s Percentage shall be re-allocated amongst the remaining Current Employers in proportion to their Current Employer’s Percentages immediately before the withdrawal of that Withdrawing Employer.”
“Where section 75 or 75A applies to a Current Employer (including where the section applies to all Current Employers on termination of the Scheme under Rule 31 but not including where a Current Employer ceases to employ any Active Members”
“Withdrawal of a Current Employer 30.0 This Rule sets out the only circumstances in which a Current Employer can cease to be a Current Employer. Substitution of new Current Employer 30.1 A Current Employer may, with the consent of the Trustees arrange for one or more other companies to assume the responsibilities of that Current Employer under the Scheme (including its obligations to pay contributions under Rule 5). The Trustees shall have an absolute discretion as to whether or not they agree to such a request. If the company or companies are not already Participating Employers, they must become Participating Employers in accordance with Clause 6.0 of the Trust Deed. 30.2 Where a Current Employer is permitted to withdraw from the Scheme under Rule 30.1, it shall cease to have any liabilities under the Scheme apart from any liabilities which arise under section 75 the 1995 Act as a result of its withdrawal. If only one company is substituted for the Current Employer that Current Employer’s Percentage shall thereafter be the responsibility of that company. If more than one company is substituted, that Current Employer’s Percentage shall be divided between those companies in a manner agreed between those companies and the Trustees. The liability of that company or companies to contribute to the Scheme under Rule 5.2 shall be reduced so as to allow for any payments made to the Scheme under Section 75 of the 1995 Act by the withdrawing Current Employer.”
“104. The 2001 Deed and Rules did create a deficit repair regime which imposed no contractual obligations on the Specified Employers, so that for as long as it endured un-amended, they were not subjected to any contractual deficit repair liability. But the 2001 Regime was not irrevocable. I consider that the Trustee retained its full power of amendment pursuant to clause 30 of the 2001 Deed, and that power remained broad enough, at least in principle, to permit the Trustee to introduce thereafter a different deficit repair regime, with contractual obligations capable of being imposed on the Specified Employers. My reasons follow. 105. The starting point lies in a legitimate predisposition to confer a broad interpretation on a power of amendment when contained in a pension scheme designed to last over many years, through unpredictable changes in circumstances, and changes in statutory structures. That approach requires a case that an amending power has been cut down, without any change in its own language, to be closely examined, all the more so where Rule 29.1 of the 2001 Rules expressly contemplates that further deficit repair measures might have to be taken after March 2006, including by way of further amendment of the Deed and Rules. That provision expressly recognises the possibilities (a) that the 2001 Regime might not in fact remedy the deficit within the contemplated timeframe (i.e. by 2006) and (b) that it might do so, but that a further deficit might arise thereafter. Mr Spink submitted that deficits existing after March 2006 could simply be repaired by Schedules of increased Contributions on the Current Employers, without any amendment. So they could, at least in theory, but 2001 Rule 29.1 expressly contemplates that amendment might be necessary. 106. It is not difficult to envisage a scenario under which, after March 2006, the burden of ongoing deficit repair contributions on Current Employers might become so grave that they, or a sufficient minority of them, were minded to call for a winding up under 2001 Rule 31.0(ii) where recourse by the Trustee to Specified Employers by a further amendment could provide sufficient additional funding to avoid winding up. Although it has not been suggested that this was the reason for the present application, for the purposes of interpretation the question is what possible future events might justify an amendment of the Deed and Rules, viewed as at 2001, looking forward. … 165. At stage 1, it will be apparent that my answer to Issue l(b)(i) is yes. The power of amendment in clause 30 of the 2007 Deed is broad enough in scope to accommodate an amendment of the Scheme which would require Specified Employers (as well as Current Employers) to contribute to the Scheme generally, by reference to liabilities in the Scheme attributable to pensionable service of members whilst in the service of the Participating Employer in question.”
“[21] … Even if a measure of fine-tuning of the proposal were possible, I accept that, after so many months of negotiation, the proposal represents the best arrangement which the participating employers will agree and therefore that, realistically, the choice is between implementing the proposal and a winding up. . . … [35] I was told that the reason why the proposal does not call for a withdrawing employer to make a premium payment sufficient to make good the imbalance is simply because the employers will not accept that withdrawal should be on that basis: the premium would be unacceptably large. If therefore employers are to be free to withdraw, as it is an essential part of the proposal that they should be, the deal that has been struck is that they must take with them a proportionate share of the overall liabilities.”
“I made the point above that, when a clause is simply repeated with no change or virtually no change, that may well suggest that in truth its meaning has not changed. In this case, that inference is underscored by the fact that clause 30 contains a number of restrictions and exceptions, and the restriction for which the appellant submits does not form one of them. Moreover, the structure of clause 30 suggests strongly that this list was intended to be an exhaustive list and that no other implied limitation was to be found from any other part of the trust deed or rules, let alone any implied limitation by virtue of something that had since ceased to form part of the trust deed. Mr Spink submits that clause 30 was not materially different prior to 2001 and that it was possible that the new proviso was not adopted because the existing clause was simply renewed, but in my judgment there was clearly an opportunity to amend clause 30 in 2001 and the question of protection for the Specified Employers was not obscured from view as the 2001 scheme involved the removal of OR 31.0(ii). In those circumstances clause 30 as readopted in 2001 cannot reasonably be interpreted as subject to the implied restriction for which the appellant contends.”