Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank Plc & Ors [2018] EWHC 2839 (Ch)

“3.10 The GMP is the minimum pension that a scheme that was contracted out of the Additional State Pension between 6 April 1978 and 5 April 1997 has to provide to its members. GMP rules were abolished for post 5 April 1997 contracted out service. However past accruals remain subject to them and a scheme must still provide a pension at least as good as the GMP for any time a person was a member of that scheme, up to and including 5 April 1997. 3.11 Legislation requires GMPs to be determined on an unequal basis: under the Pension Schemes Act 1993 (“PSA93”), a woman’s GMP accrues at a greater rate than that of a man in recognition that a woman’s working life for State pension purposes was five years shorter than that of a man. As a result, where a woman and a man have an identical work history, the woman’s overall GMP will be greater than that of the man. 3.12 As a woman is also entitled to receive her GMP at an earlier age (age 60) than a man is entitled to receive his (age 65), further differences can arise for a GMP in payment. This is through the operation of the revaluation provisions of PSA93 applicable up to this GMP pension age and of the indexation provisions of PSA93 after GMP pension age. Whilst the rates of revaluation or indexation do not differ on the basis of sex, a woman will be entitled to indexation in periods during which a man is entitled to revaluation, due to the differing GMP pension ages, and the rate of indexation differs from the rate of revaluation. 3.13 The requirement that GMPs are calculated and paid on an unequal basis flows through to result in an inequality of the overall scheme pension in payment. This is compounded by the requirements for preservation, revaluation and anti-franking legislation in PSA93 that benefits above GMP (“excess benefits”) be determined with reference to this unequal GMP and the fact that revaluation and indexation provided on the excess benefit can and usually differs to that on the GMP element (depending on the legislation and the rules of the scheme). 3.14 As a result, it can become far from clear which sex receives the greater total scheme benefit. It is also possible for the position to change over the course of a lifetime so that an individual who is advantaged on the basis of sex when the GMP is first paid becomes disadvantaged later. In other words, which sex is advantaged may fluctuate over the course of a lifetime.”

“implementing [GMP] equalisation programmes for all private sector contracted out schemes on a basis of equalising actuarial values would add in the region of £13 billion to pension scheme liabilities, and could absorb up to £300 million in implementation costs”

“45.- The additional pension in a Category A retirement pension. (1) The weekly rate of the additional pension in a Category A retirement pension in any case where the pensioner attained pensionable age in a tax year before 6th April 1999 shall be the sum of the following— (a) in relation to any surpluses in the pensioner's earnings factors, the weekly equivalent of 1 1/4 per cent. of the adjusted amount of the surpluses mentioned in section 44(3)(b) above; and (b) if the pensioner has one or more units of additional pension, a specified amount for each of those units. (2) The weekly rate of the additional pension in a Category A retirement pension in any case where the pensioner attained pensionable age in a tax year after 5th April 1999 shall be the sum of the following— (a) in relation to any surpluses in the pensioner's earnings factors for the tax years in the period beginning with 1978-79 and ending with 1987-88, the weekly equivalent of 25/N per cent. of the adjusted amount of those surpluses; and (b) in relation to any surpluses in the pensioner's earnings factors in a tax year after 1987-88 but before the first appointed year, the weekly equivalent of the relevant percentage of the adjusted amount of those surpluses; and (c) in relation to any tax years falling within subsection (3A) below, the weekly equivalent of the amount calculated in accordance with Schedule 4A to this Act; and (d) in relation to the flat rate introduction year and subsequent tax years, the weekly equivalent of the amount calculated in accordance with Schedule 4B to this Act; and (e) if the pensioner has one or more units of additional pension, a specified amount for each of those units. (2A) For the purposes of subsections (1)(b) and (2)(e) the “specified amount” is an amount to be specified by the Secretary of State in regulations. (3) In subsection (2)(b) above, “relevant percentage” means — (a) 20/N per cent., where the pensioner attained pensionable age in 2009-10 or any subsequent tax year; (b) (20 + X)/N per cent., where the pensioner attained pensionable age in a tax year falling within the period commencing with 1999-2000 and ending with 2008-9. (3A) The following tax years fall within this subsection– (a) the first appointed year; (b) subsequent tax years before the flat rate introduction year. (4) In this section— (a) X = 0.5 for each tax year by which the tax year in which the pensioner attained pensionable age precedes 2009-10; and (b) N = the number of tax years in the pensioner's working life which fall after 5th April 1978; but paragraph (b) above is subject, in particular, to subsection (5) and, where applicable, section 46 below. (5) Regulations may direct that in prescribed cases or classes of cases any tax year shall be disregarded for the purpose of calculating N under subsection (4)(b) above, if it is a tax year after 5th April 1978 in which the pensioner— (a) was credited with contributions or earnings under this Act by virtue of regulations under section 22(5) above, or (b) was precluded from regular employment by responsibilities at home, or (c) in prescribed circumstances, would have been treated as falling within paragraph (a) or (b) above, but not so as to reduce the number of years below 20. (6) For the purposes of subsections (1) and (2) above, the weekly equivalent of any amount shall be calculated by dividing that amount by 52 and rounding the result to the nearest whole penny, taking any 1/2p as nearest to the next whole penny. (7) Where the amount falling to be rounded under subsection (6) above is a sum less than 1/2p, the amount calculated under that subsection shall be taken to be zero, notwithstanding any other provision of this Act or the Administration Act. (8) The sums which are the weekly rate of the additional pension in a Category A retirement pension are subject to alteration by orders made by the Secretary of State under section 150 of the Administration Act.”

“2.5.19 … Entitlement is based on earnings between the LEL [lower earnings limit] and the UEL [upper earnings limit], which are recorded each year. At retirement age, the relevant earnings for each year are revalued in line with the growth of average earnings. The pension payable is calculated in two stages. The total revalued amount is first divided by the number of years in the individual's working life since 6 April 1978. The result is then multiplied by a percentage which for a person reaching state pension age before 6 April 1999 is 25 per cent, and for a person reaching that age after 5 April 2009 is twenty per cent, with a sliding scale for the intervening years. For those retiring before 1999, SERPS is effectively the equivalent of a scheme accruing at n/80 for the twenty-year period since 1978, (though of revalued average, rather than final earnings). When the transition is complete, the effective accrual rate will drop to as little as n/245 for a man with a 49-year working life. As for basic pension, pensions in payment are indexed by retail prices.”

“61. Differential pensionable ages were first introduced for men and women in the United Kingdom in 1940, well before the Convention had come into existence, although the disparity persists to the present day (see paragraph 32 above). It would appear that the difference in treatment was adopted in order to mitigate financial inequality and hardship arising out of the woman’s traditional unpaid role of caring for the family in the home rather than earning money in the workplace. At their origin, therefore, the differential pensionable ages were intended to correct “factual inequalities” between men and women and appear therefore to have been objectively justified under Article 14 (see paragraph 51 above). 62. It follows that the difference in pensionable ages continued to be justified until such time that social conditions had changed so that women were no longer substantially prejudiced because of a shorter working life. This change, must, by its very nature, have been gradual, and it would be difficult or impossible to pinpoint any particular moment when the unfairness to men caused by differential pensionable ages began to outweigh the need to correct the disadvantaged position of women. Certain indications are available to the Court. Thus, in the 1993 White Paper, the Government asserted that the number of women in paid employment had increased significantly, so that whereas in 1967 only 37% of employees were women, the proportion had increased to 50% in 1992. In addition, various reforms to the way in which pension entitlement was assessed had been introduced in 1977 and 1978, to the benefit of women who spent long periods out of paid employment. As of 1986, it was unlawful for an employer to have different retirement ages for men and women (see paragraph 33 above). 63. According to the information before the Court, the Government made a first, concrete, move towards establishing the same pensionable age for both sexes with the publication of the Green Paper in December 1991. It would, no doubt, be possible to argue that this step could, or should, have been made earlier. However, as the Court has observed, the development of parity in the working lives of men and women has been a gradual process, and one which the national authorities are better placed to assess (see paragraph 52 above). Moreover, it is significant that many of the other Contracting States still maintain a difference in the ages at which men and women become eligible for the State retirement pension (see paragraph 37 above). Within the European Union, this position is recognised by the exception contained in the Directive (see paragraph 38 ...). 64. In the light of the original justification for the measure as correcting financial inequality between the sexes, the slowly evolving nature of the change in women’s working lives, and in the absence of a common standard amongst the Contracting States (see Petrovic, cited above, §§ 36-43), the Court finds that the United Kingdom cannot be criticised for not having started earlier on the road towards a single pensionable age. 65. Having once begun the move towards equality, moreover, the Court does not consider it unreasonable of the Government to carry out a thorough process of consultation and review, nor can Parliament be condemned for deciding in 1995 to introduce the reform slowly and in stages. Given the extremely far-reaching and serious implications, for women and for the economy in general, these are matters which clearly fall within the State’s margin of appreciation.”

“Contracting out of SERPS The concept of contracting out 2.3.26 Instead of receiving the benefits provided by SERPS, an option may be exercised to pay reduced national insurance contributions, on condition that alternative arrangements are made either to receive benefits broadly equivalent to SERPS or to pay minimum contributions related to the cost of providing such benefits. The option may be made on behalf of an entire scheme and all those who choose to be members of it, it may be made by an individual through a personal pension arrangement. This process is known as contracting out, and the regulation of the alternative benefits provided by contracted-out schemes is one of the main driving forces behind social security legislation. 2.3.27 Before the passage of the 1986 Social Security Act, it was possible to contract out only if the occupational scheme provided a GMP. The reduction in the rate of national insurance contributions given to employers and employees who were members of such schemes, known as the contracted-out rebate, was set at a level based on the cost to those schemes of providing GMPs. Schemes which contract out on this basis are known as contracted-out salary related schemes (COSRS). The effect of this was that money purchase schemes could contract out only if the employer was prepared to offer an earnings-related underpin which was at least as good as the GMP. 2.3.28 Since 1988, it has been possible to contract out directly on a money purchase basis. … [Note: a scheme contracted out on a money purchase was known as a COMPS. The present claim is only concerned with COSRS. COMPS were not required to provide GMPs.] 2.3.29 Over 30,000 schemes are presently contracted out, of which some 13,500 are COSRS and the remainder COMPS. …”

“GMPs are calculated in broadly the same manner as the SERPS benefits they replace. The effect of revaluing a preserved GMP for an early leaver cannot precisely mirror what the SERPS benefit would have been, since the latter is calculated over the individual's whole working life. Schemes are required to index the GMP after it has come into payment only by growth in prices up to a maximum of three per cent. These two effects taken together mean that the initial level of GMP is not the same as the equivalent SERPS pension would have been, and that after retirement if prices grow more quickly than three per cent a year, the two will steadily diverge. In these circumstances, the member will be paid both the GMP from the scheme and any shortfall between this and his or her SERPS entitlement directly from the National Insurance Fund. Statutory increases in the value of GMP rights may not be offset against the overall level of benefits from the scheme.”

“(1) Subject to the provisions of this Part, the scheme must – (a) provide for the earner to be entitled to a pension under the scheme if he attains pensionable age; and (b) contain a rule to the effect that the weekly rate of the pension will be not less than his guaranteed minimum (if any) under sections 14 to 16. … (3) Subject to subsection (4) [postponement of GMPs], the scheme must provide for the pension to commence on the date on which the earner attains pensionable age and to continue for his life.”

“(1) An earner has a guaranteed minimum in relation to the pension provided by a scheme that was a salary related contracted-out scheme if in any tax week in a relevant year – (a) earnings were paid to or for the earner's benefit in respect of employment which was contracted-out by reference to the scheme; and (b) those earnings were in excess of the lower earnings limit for that tax week (or the prescribed equivalent if the earner was paid otherwise than weekly). (2) Subject to section 15(1) [postponement of GMPs], the guaranteed minimum shall be the weekly equivalent of an amount equal to the appropriate percentage of the total of the earner's earnings factors for the relevant years, so far as derived from excess earnings mentioned in subsection (1)(b) upon which primary Class 1 contributions have been paid or treated as paid. … (5) In subsection (2) the "appropriate percentage" means – (a) in respect of the earner's earnings factors for any tax year not later than the tax year 1987-88 – (i) if the earner was not more than 20 years under pensionable age on 6th April 1978, 1.25 per cent.; (ii) in any other case 25/N per cent.; (b) in respect of the earner's earnings factors for the tax year 1988-89 and for subsequent tax years – (i) if the earner was not more than 20 years under pensionable age on 6th April 1978, 1 per cent.; (ii) in any other case 20/N per cent.; where N is the number of years in the earner's working life (assuming he will attain pensionable age) which fall after 5th April 1978. … (7) For the purposes of subsection (2) the weekly equivalent of the amount there mentioned shall be calculated by dividing that amount by 52. (8) In this section "relevant year" means any tax year in the earner's working life (not being earlier than the tax year 1978-79 or later than the tax year ending immediately before the principal appointed day [which was 6 April 1997]).”

“4.18.61 The anti-franking requirements came into effect from 1 January 1985. They were needed because scheme members in a contracted-out earnings related scheme effectively accrue rights to two benefits: the GMP, and the benefits accrued under the scheme rules, within which the GMP rights are subsumed. These two benefits are treated differently for the purposes of preservation and revaluation of accrued rights. The GMP element must be revalued in one of a number of ways laid down in legislation. The preservation requirements for the overall pension are less advantageous to the member than those for the GMP. Where the overall rights exceed the GMP rights, it would be possible for the increases to the GMP to be absorbed within the overall ceiling on the individual's scheme benefits. In effect, the individual would lose the advantage of the GMP revaluation requirements. Under the anti-franking requirements such practices are forbidden, and the full effect of the GMP revaluation must be given as an addition to the overall scheme benefits.”

“(i) if the earner was not more than 20 years under pensionable age [i.e. 65/60] on 6th April 1978, 1 per cent.; (ii) in any other case 20/N per cent.; where N is the number of years in the earner's working life (assuming he will attain pensionable age) which fall after 5th April 1978.”

“… the period beginning with the tax year in which the person attains the age of 16 and ending with – (a) the tax year before the one in which the person attains the age of 65 in the case of a man or 60 in the case of a woman, or (b) if earlier, the tax year before the one in which the person dies.”

“13. … The divisor [N] will therefore be smaller for a woman than for a man, and the corresponding percentage [i.e. the “appropriate percentage”] will be greater, but having regard to the differing lengths of their respective working lives the overall object and effect are that the GMP of a person working to the statutory pensionable age with a full service record of contractedout employment is calculated by reference to the same percentage of earnings whatever the sex of that person. At the end of their respective working lives, again with a full service record of contracted-out employment, the percentage will still be the same, although the man who retires at 65 will have a higher GMP than a woman who retired at 60, but only because he has worked an extra five years and will therefore have more earnings to which the appropriate percentage will apply. In order to achieve this result, and bearing in mind the shorter working life of the woman, the woman's accrual rate is necessarily slightly higher than the man's. 14. The result of this formula is that the GMPs of a man and a woman retiring at their respective pensionable ages of 65 and 60 will, assuming their working history to be otherwise similar, be non-discriminatory. However, their GMPs will or may become discriminatory if one or other or both of them leave the scheme before those respective ages, for example by taking early retirement, becoming redundant or moving to another employer. If, for example, both leave the scheme at 55 they will, by reason of their different rates of accrual, have accrued different GMPs.”

“1. Each Member State shall ensure that the principle of equal pay for male and female workers for equal work or work of equal value is applied. 2. For the purpose of this Article, 'pay' means the ordinary basic or minimum wage or salary and any other consideration, whether in cash or in kind, which the worker receives directly or indirectly, in respect of his employment, from his employer. Equal pay without discrimination based on sex means: (a) that pay for the same work at piece rates shall be calculated on the basis of the same unit of measurement; (b) that pay for work at time rates shall be the same for the same job.”

“The principle of equal pay for men and women outlined in article 119 of the Treaty, hereinafter called “principle of equal pay”, means for the same work or for work to which equal value is attributed, the elimination of all discrimination on grounds of sex with regard to all aspects and conditions of remuneration.”

“For the same work or for work to which equal value is attributed, direct and indirect discrimination on grounds of sex with regard to all aspects and conditions of remuneration shall be eliminated.”

“schemes not governed by Council Directive 79/7/EEC of 19 December 1978 on the progressive implementation of the principle of equal treatment for men and women in matters of social security whose purpose is to provide workers … in an undertaking or group of undertakings, area of economic activity, occupational sector or group of sectors with benefits intended to supplement the benefits provided by statutory social security schemes or to replace them, whether membership of such schemes is compulsory or optional.”

“1.

“1. This Directive shall be without prejudice to the right of Member States to exclude from its scope: (a) the determination of pensionable age for the purposes of granting old-age and retirement pensions and the possible consequences thereof for other benefits; … ”

“ 62 The equal treatment rule (1) An occupational pension scheme which does not contain an equal treatment rule shall be treated as including one. (2) An equal treatment rule is a rule which relates to the terms on which – (a) persons become members of the scheme, and (b) members of the scheme are treated. (3) Subject to subsection (6), an equal treatment rule has the effect that where- (a) a woman is employed on like work with a man in the same employment, (b) a woman is employed on work rated as equivalent with that of a man in the same employment, or (c) a woman is employed on work … of equal value to that of a man in the same employment, but (apart from the rule) any of the terms referred to in subsection (2) is or becomes less favourable to the woman than it is to the man, the term shall be treated as so modified as not to be less favourable.

“67 Sex equality rule (1) If an occupational pension scheme does not include a sex equality rule, it is to be treated as including one. (2) A sex equality rule is a provision that has the following effect— (a) if a relevant term is less favourable to A than it is to B, the term is modified so as not to be less favourable; (b) if a term confers a relevant discretion capable of being exercised in a way that would be less favourable to A than to B, the term is modified so as to prevent the exercise of the discretion in that way. (3) A term is relevant if it is— (a) a term on which persons become members of the scheme, or (b) a term on which members of the scheme are treated. (4) A discretion is relevant if its exercise in relation to the scheme is capable of affecting— (a) the way in which persons become members of the scheme, or (b) the way in which members of the scheme are treated. (5) The reference in subsection (3)(b) to a term on which members of a scheme are treated includes a reference to the term as it has effect for the benefit of dependants of members. (6) The reference in subsection (4)(b) to the way in which members of a scheme are treated includes a reference to the way in which they are treated as the scheme has effect for the benefit of dependants of members. (7) If the effect of a relevant matter on a person (A) differs according to the effect it has on a person of the same sex as A, according to whether A is married, in a civil partnership, or for some other reason due to A's family status, a comparison for the purposes of this section of the effect of that matter on persons of the opposite sex must be with a person of the opposite sex to A who is in the same position as A and in particular— (a) where A is married to someone of the opposite sex, A is to be compared to a person of the opposite sex to A (“B”) where B is married to someone of the opposite sex to B; (b) where A is married to someone of the same sex as A or is in a civil partnership, A is to be compared to B where B is married to someone of the same sex as B or is in a civil partnership. (8) A relevant matter is— (a) a relevant term; (b) a term conferring a relevant discretion; (c) the exercise of a relevant discretion in relation to an occupational pension scheme. (9) This section, so far as relating to the terms on which persons become members of an occupational pension scheme, does not have effect in relation to pensionable service before 8 April 1976. (10) This section, so far as relating to the terms on which members of an occupational pension scheme are treated, does not have effect in relation to pensionable service before 17 May 1990.”

“68 Sex equality rule: consequential alteration of schemes (1) This section applies if the trustees or managers of an occupational pension scheme do not have power to make sex equality alterations to the scheme. (2) This section also applies if the trustees or managers of an occupational pension scheme have power to make sex equality alterations to the scheme but the procedure for doing so— (a) is liable to be unduly complex or protracted, or (b) involves obtaining consents which cannot be obtained or which can be obtained only with undue delay or difficulty. (3) The trustees or managers may by resolution make sex equality alterations to the scheme. (4) Sex equality alterations may have effect in relation to a period before the date on which they are made. (5) Sex equality alterations to an occupational pension scheme are such alterations to the scheme as may be required to secure conformity with a sex equality rule.”

“69 Defence of material factor (1) The sex equality clause in A's terms has no effect in relation to a difference between A's terms and B's terms if the responsible person shows that the difference is because of a material factor reliance on which— (a) does not involve treating A less favourably because of A's sex than the responsible person treats B, and (b) if the factor is within subsection (2), is a proportionate means of achieving a legitimate aim. (2) A factor is within this subsection if A shows that, as a result of the factor, A and persons of the same sex doing work equal to A's are put at a particular disadvantage when compared with persons of the opposite sex doing work equal to A's. (3) For the purposes of subsection (1), the long-term objective of reducing inequality between men's and women's terms of work is always to be regarded as a legitimate aim. (4) A sex equality rule has no effect in relation to a difference between A and B in the effect of a relevant matter if the trustees or managers of the scheme in question show that the difference is because of a material factor which is not the difference of sex. (5) “Relevant matter” has the meaning given in section 67. (6) For the purposes of this section, a factor is not material unless it is a material difference between A's case and B's.”

“(a) if a relevant term is less favourable to A than it is to B, the term is modified so as not to be less favourable; (b) if a term confers a relevant discretion capable of being exercised in a way that would be less favourable to A than to B, the term is modified so as to prevent the exercise of the discretion in that way.”

“B12. Calculation of benefits and contributions In spite of anything else in these Special Rules, benefits and contributions will always be calculated and paid in a way which is consistent with the requirements of: (i) Article 141 of the Treaty of Rome and section 62 of the Pensions Act 1995 … .”

“7. Although consideration in the nature of social security benefits is not therefore in principle alien to the concept of pay, there cannot be brought within this concept, as defined in Article 119, social security schemes or benefits, in particular retirement pensions, directly governed by legislation, without any element of agreement within the undertaking or the occupational branch concerned, which are obligatorily applicable to general categories of workers. 8. These schemes assure for the workers the benefit of a legal scheme, the financing of which workers, employers and possibly the public authorities contribute in a measure determined less by the employment relationship between the employer and the worker than by considerations of social policy. 9. Accordingly the part due from the employers in the financing of such schemes does not constitute a direct or indirect payment to the worker. 10. Moreover, the worker will normally receive benefits legally prescribed not by reason of the employer's contribution but solely because the worker fulfils the legal conditions for the grant of benefits. 11. These are likewise characteristics of special schemes which, within the framework of the general system of social security established by legislation, relate in particular to certain categories of workers. 12. It must therefore be found that situations involving discrimination resulting from the application of such a system are not subject to the requirements of Article 119 of the Treaty. 13. It follows from the above that a retirement pension established within the framework of a social security scheme laid down by legislation does not constitute consideration which the worker receives indirectly in respect of his employment from his employer within the meaning of the second paragraph of Article 119.”

“[12] … the concept of pay, within the meaning of the second paragraph of article 119, comprises any other consideration, whether in cash or in kind, whether immediate or future, provided that the worker receives it, albeit indirectly, in respect of his employment from his employer … … [16] … a redundancy payment made by the employer … cannot cease to constitute a form of pay on the sole ground that, rather than deriving from the contract of employment, it is a statutory or ex gratia, payment. [17] In the case of statutory redundancy payments it must be borne in mind that, as the court held in its judgment of 8 April 1976 in [Defrenne II], … para 40, article 119 of the Treaty also applies to discrimination arising directly from legislative provisions. This means that benefits provided for by law may come within the concept of pay for the purposes of that provision. [18] … the fact that a benefit is in the nature of pay cannot be called in question where the worker is entitled to receive the benefit in question from his employer by reason of the existence of the employment relationship.”

“[25] … first of all … the schemes in question are the result either of an agreement between workers and employers or of a unilateral decision taken by the employer. They are wholly financed by the employer or by both the employer and the workers without any contribution being made by the public authorities in any circumstances. Accordingly, such schemes form part of the consideration offered to workers by the employer. [26] Secondly, such schemes are not compulsorily applicable to general categories of workers. On the contrary, they apply only to workers employed by certain undertakings, with the result that affiliation to those schemes derives of necessity from the employment relationship with a given employer. Furthermore, even if the schemes in question are established in conformity with national legislation and consequently satisfy the conditions laid down by it for recognition as contracted-out schemes, they are governed by their own rules. [27] Thirdly, … even if the contributions paid to those schemes and the benefits which they provide are in part a substitute for those of the general statutory scheme, that fact cannot preclude the application of article 119. It is apparent from the documents before the court that occupational schemes such as that referred to in this case may grant to their members benefits greater than those which would be paid by the statutory scheme, with the result that their economic function is similar to that of the supplementary schemes which exist in certain member states, where affiliation and contribution to the statutory scheme is compulsory and no derogation is allowed. In its judgment of 13 May 1986 in Bilka-Kaufhaus G.m.b.H. v. Weber von Hartz (Case 170/84) [1987] I.C.R. 110, the court held that the benefits awarded under a supplementary pension scheme fell within the concept of pay, within the meaning of article 119. [28] It must therefore be concluded that, unlike the benefits awarded by national statutory social security schemes, a pension paid under a contracted out scheme constitutes consideration paid by the employer to the worker in respect of his employment and consequently falls within the scope of article 119 of the Treaty. … [30] The answer to the second question submitted by the Court of Appeal must therefore be that a pension paid under a contracted-out private occupational scheme falls within the scope of article 119 of the Treaty.”

“[32] … article 119 prohibits any discrimination with regard to pay as between men and women, whatever the system which gives rise to such inequality. Accordingly, it is contrary to article 119 to impose an age condition which differs according to sex in respect of pensions paid under a contracted-out scheme, even if the difference between the pensionable age for men and that for women is based on the one provided for by the national statutory scheme.”

“[89] This is so here a fortiori since the documents show that, as a matter of accounting, once the employer’s and the employees’ contributions have been paid into the scheme, they are managed as a single fund and it is no longer possible to distinguish them.”

“[45] …if the pension concerns only a particular category of workers, if it is directly related to the period of service and if its amount is calculated by reference to the civil servant’s last salary. The pension paid by the public employer is therefore entirely comparable to that paid by a private employer to his former employees.”

“2. The [issue in Dubery] arises by reason of the impact of art 141 EC (formerly art 119 of the EC Treaty) of the amended Treaty of Rome, as interpreted by the European Court of Justice (the ECJ) in a series of decisions commencing with Barber v Guardian Royal Exchange Assurance Group Case C-262/88 [1990] 2 All ER 660, [1990] ECR I-1889, on schemes which differentiated between male and female members for the normal retirement date (NRD). Until Barber's decision given by the ECJ on 17 May 1990 British schemes usually mirrored the different ages at which state pensions were payable, namely 65 for males and 60 for females. Article 141 requires that male and female workers should receive equal pay for equal work or work of equal value. In Barber's case the ECJ held that pensions are pay and must be equal for both men and women. Accordingly, schemes which provide for unequal retirement ages as between men and women are unlawful. 3. In further decisions, most notably Coloroll Pension Trustees Ltd v Russell Case C200/91 [1995] All ER (EC) 23, [1995] ICR 179, the ECJ decided further points arising out of Barber's case and in particular that: (1) for pensionable service prior to 17 May 1990 it was not unlawful for pension benefits to be provided at different NRDs for men and women; (2) a scheme could be amended so as to equalise benefits up or down, for example to make the NRD for both men and women at age 60 or 65; and (3) for pensionable service between 17 May and the date of any such amendment (a period known in the pensions industry as the Barber window or corridor) men were entitled to be treated as if their NRD was the same as the NRD for women. Thus in the usual form of scheme men were to be treated as having their NRD at age 60, but only in respect of benefits accruing from pensionable service in the Barber window.”

“[20] Accordingly, although until the age of 60 the financial position of a woman taking early retirement on grounds of ill health is comparable to that of a man in the same situation, neither of them as yet entitled to payment of the State pension, that is no longer the case between the ages of 60 and 65 since that is when women, unlike men, start drawing that pension. That difference as regards the objective premise, which necessarily entails that the amount of the bridging pension is not the same for men and women, cannot be considered discriminatory. [21] What is more, given the purpose of the bridging pension, to maintain the amount for women at the same level as that which obtained before they received the State pension would give rise to unequal treatment to the detriment of men who do not receive the State pension until the age of 65. [22] Furthermore, it is common ground that as from the age of 65 the bridging pension for men is also reduced by the amount of the State pension to which they are entitled. … [23] It must therefore be held that the mechanism for calculating the bridging pension is neutral, which confirms the absence of any discrimination.”

“54 In relation to the interrelationship of Article 141 and the integration of occupational pension schemes with the State pension scheme, I should mention two decisions of the ECJ. In Case C-132/92, Roberts v. Birds Eye Walls Ltd [1994] ICR 338, it was held that certain higher, “bridging”, pension payments to men were justifiable as their aim and effect, in general terms, was to equalise pensions between men and women for a period, once the State pension was taken into account. To my mind, this clearly establishes that integration with the State scheme can provide objective justification for even a discriminatory policy, but that does not, of course, mean it always will do so. By contrast, in Beune, the ECJ held that Article 141 was infringed, where different treatment between men and women under an occupational pension scheme was sought to be justified by reference to their respective differential treatment under the State scheme. Although, at first sight, these two decisions may appear hard to reconcile, I believe that they are consistent. The facts of Beune are complicated, but the infringement arose, in essence, because there was no equal treatment between married men and married women, whether one looked at their respective occupational pension rights alone, or at the combination of their respective occupational pension rights and their rights under the State scheme. In other words, unlike in Birds Eye, the discrimination policy in Beune was unlawful, because the occupational pension rights did not achieve, and did not seek to achieve, equality between married men and married women, either taking those rights on their own or taking them together with their State pension rights.”

“38. The referring court and the Pensionsversicherungsanstalt emphasise that, having regard to this employment policy objective, the situation of female employees like Dr Kleist who have reached the age of 60 is not comparable to that of male colleagues who are the same age as, unlike male employees, the female employees have already reached the statutory normal pensionable age and they therefore benefit from social security cover resulting from their right to a pension in the event of losing their job. 39. At first glance, it could be tempting to follow this line of argument and to conclude that, merely because a right to a pension exists, there is a decisive material difference which excludes any comparability between male and female employees. 40. It is even possible to find case-law in which the Court appears to take such a position. Thus, in Burton, Birds Eye Walls and Hlozek the Court held it lawful to link certain social benefits granted by employers to a pensionable age that differs for men and women. 41. However, it appears to me that these judgments dealt with isolated cases and cannot in any event be applied more generally. Thus, the bridging payments in Burton and Birds Eye Walls served to cover employees’ loss of income where they took early retirement for operational or health reasons. In Hlozek the bridging allowance was specifically aimed at financially cushioning a special risk of long-term unemployment, a risk which was statistically proven to arise for men and women at different ages and was particularly high as the statutory retirement age drew closer. In the present case however, so far as is apparent from the documents in the case, there are no indications of there being such a specific risk. 42. Quite apart from the specific features of each case, I consider that it would also be an error for reasons of principle to permit employers to differentiate between male and female employees according to the statutory normal pensionable age that is respectively applicable. Such an approach would lead to the differences between men and women in relation to the statutory normal pensionable age that still exist extending to other areas – here to the area of dismissal. Generalising the differences within the framework of statutory social security systems would, however, be contrary to the Court’s settled case-law, according to which the exception that still exists to the principle of equal treatment in relation to the pensionable age under statutory pension schemes (Article 7(1)(a) of Directive 79/7) is to be interpreted strictly.”

“35. In the case in the main proceedings, the rules establishing the difference in treatment at issue are designed to govern the circumstances in which employees can lose their job. 36 In the context of that case, contrary to the position in the cases which gave rise to the judgments in Case C-132/92 Roberts [1993] ECR I-5579 (paragraph 20) and in Hlozek (paragraph 48), the advantage accorded to female workers of being able to claim a retirement pension from an age five years younger than that set for male workers is not directly connected with the object of the rules establishing a difference in treatment. 37 That advantage cannot place female workers in a specific situation vis-à-vis male workers, as men and women are in identical situations so far as concerns the conditions governing termination of employment (see, to this effect, Case 151/84 Roberts [1986] ECR 703, paragraph 36). 38 Furthermore, as is apparent from the order for reference, the circumstance referred to in paragraph 33 of the present judgment results from the fact that the Republic of Austria wished to establish, in accordance with the exception laid down in Article 7(1)(a) of Directive 79/7 to the principle of equal treatment, a regime prescribing a different statutory pensionable age for men and women in order to compensate for the disadvantage suffered by women socially, in relation to the family and economically. 39 The Court has repeatedly held that, given the fundamental importance of the principle of equal treatment, the exception to the prohibition of discrimination on grounds of sex, provided for in that provision, must be interpreted strictly, so as to be applicable only to the determination of pensionable age for the purposes of granting old-age and retirement pensions and to the possible consequences thereof for other social security benefits (see, to this effect, Marshall, paragraph 36; Case C-207/04 Vergani [2005] ECR I-7453, paragraph 33; and Case C-423/04 Richards [2006] ECR I-3585, paragraph 36).”

“The fact that a scheme is statutory is not, in my view, the conclusive test. Legislation may be used for different purposes. If it defines rights and obligations under a social security scheme for all workers, or for groups of workers who are not in any sense 'employed by' the State, it is no doubt based on 'considerations of social policy' rather than on an employment relationship. On the other hand, if by the same machinery, legislation, rules are adopted in respect of those 'employed by' the State, those rules may be an expression of social policy, or they may equally spring from and govern the employment relationship. It is true that the latter may indeed at the same time reflect a State's ideas of social policy, but that factor cannot in my view take away their essential characteristic as rules governing the employment relationship. If it were otherwise, civil servants could not rely upon the principle of equal pay for equal work contained in Article 119, and there seems to be nothing in that Article 119 or in the case law of the Court to justify such a result. The relevant question is thus whether what is done is done by the State essentially as an employer.”

“Admittedly, as regards pay Mr. Newstead was treated differently from his female colleagues and he was understandably offended by the fact. But neither Worringham nor Liefting supports the inference that any treatment which differs according to sex and affects gross or net pay automatically justifies the direct application of Article 119, without any regard for the legal basis on which the difference was made. I consider that such an interpretation exceeds the scope of the judgments delivered in those cases. It would, moreover, conflict with the division of powers imposed by the EEC Treaty and clearly enunciated in Defrenne III.”

“13. As the United Kingdom and the Commission rightly pointed out, however, the difference between the net pay of men and women in the case before the Employment Appeal Tribunal is the result of the fact that only men are required to belong to the widows' pension fund and thus have a deduction made from their salary as a contribution to the fund. 14. It must therefore be concluded that the factor which gives rise to the disparity at issue is neither a benefit paid to workers nor a contribution paid by the employer to a pension scheme on behalf of the employee, which might be regarded as “consideration ... which the worker receives, directly or indirectly” as referred to in Article 119. 15. The disparity at issue is in fact the result of the deduction of a contribution to an occupational pension scheme. That scheme contains some provisions which are more favourable than the statutory scheme of general application and is a substitute for the latter. Such a contribution must therefore, like a contribution to a statutory social security scheme, be considered to fall within the scope of Article 118 of the Treaty, not of Article 119.”

“I agree with [counsel] that the better analysis of GMPs is that they are in the nature of calculation factors rather than pensions themselves or discrete elements of the scheme pension. The scheme pension is one indivisible pension. No doubt an element of it can be regarded as satisfying the minimum benchmark represented by the GMP, but I regard it as incorrect to regard the scheme pension as comprising two elements made up of a GMP and the excess above it.”

“GMPs are notionally satisfied from a money purchase pot. They are not in themselves pension or discrete parts of it. They are a notional pension corresponding to what would be paid under the SERPS. The function of GMP is to identify the minimum below which the pension calculated “by reference to” contribution payments by or in respect of members may not fall: see Marsh & McLennan Cos UK Ltd v Pensions Ombudsman [2001] Pen LR 51 … .”

“ … I consider it to be of decisive importance that in Barber v. Guardian Royal Exchange Assurance (Case C-262/88) [1990] I.C.R. 616 the court expressly went back on the view it had taken in Newstead that the supplementary pension concerned did not fall under article 119 but under article 118: in Barber, at pp. 670, 673, para. 30 and point 2 of the operative part, the court ruled that “a pension paid under a contracted-out private occupational scheme falls within the scope of article 119 of the Treaty.” ”

“James v Eastleigh Borough Council also shows that, even if the protected characteristic is not the overt criterion, there will still be direct discrimination if the criterion used (in that case retirement age) exactly corresponds with a protected characteristic (in that case sex) and is thus a proxy for it.”

“Article 1 The principle of equal pay for men and women outlined in Article 119 of the Treaty, hereinafter called "principle of equal pay", means, for the same work or for work to which equal value is attributed, the elimination of all discrimination on grounds of sex with regard to all aspects and conditions of remuneration. In particular, where a job classification system is used for determining pay, it must be based on the same criteria for both men and women and so drawn up as to exclude any discrimination on grounds of sex.”

“The Guardian paid Mr. Barber a sum consisting of the cash benefits provided for in the severance terms and an amount equal to the statutory redundancy payment. He thus received a gross cash payment of £14,438 which, after deduction of income tax, has produced a net figure of £11,378. In addition, an ex gratia tax-free payment of £7,219 was made to him on 7 January 1981, making a total net sum of £18,597. As he had not attained the age of 55 at the time of his dismissal, Mr. Barber did not receive an immediate pension but was granted under the pension scheme a deferred pension payable as from 30 September 1990 and amounting to £5,165 per annum. It is not disputed that a woman aged 52 in the same position as Mr. Barber would have been entitled to an immediate pension plus the statutory redundancy payment. It is also agreed that the value of such compensation would have been greater than the total payments received by Mr. Barber.”

“ (3) Is the principle of equal pay referred to in article 119 and the Equal Pay Directive infringed in the circumstances of the present case if (a) a man and a woman of the same age are made compulsorily redundant in the same circumstances and, in connection with that redundancy, the woman receives an immediate private pension but the man receives only a deferred private pension; or (b) the total value of the benefits received by the woman is greater than the total value of the benefits received by the man?”

“Question 3(b) 45. I would remind the court that the Guardian's severance terms accord redundant employees who are not entitled to an immediate pension a higher terminal payment. The parties to the main proceedings are agreed, however, that the value of an immediate pension - the actuarial value as I understand it - is greater than the amount of the higher terminal payment. In question 3(b) the Court of Appeal wishes to ascertain whether discrimination contrary to Community law exists where the total value of the benefits received by a redundant female employee is greater than the total value of the benefits received by a male employee. 46. In so far as the question relates to the difference established in the total amount of benefits for men and women of the same age it can be answered in the same manner as in paragraph 44 above. However, the question raises an additional problem, in so far as it suggests that, in the event of article 119 being applicable, the principle of equal pay contained therein is not infringed provided that the total value of the benefits is the same, even though it is made up of components which differ according to sex but are mutually compensating. In my view the principle of equal pay implies equality at the level of each component of remuneration. If it were otherwise, the enforceability of that principle by the courts would be seriously jeopardized. The courts would then have to evaluate and compare the most diverse advantages which employers confer on their employees. That may call for a complex factual analysis which would not guarantee the equality of total pay as effectively as the equality of each component separately, which is easier to verify. I therefore suggest supplementing the answer given to the previous question as follows: the principle of equal pay implies equality at the level of each component of remuneration.”

“The approach of the British courts is the same. In Hayward v. Cammell Laird Shipbuilders Ltd. (No. 2) [1988] A.C. 894, the House of Lords considered that article 1 of Directive 75/117 cannot be understood as meaning that, where pay as a whole is the same for men and women, it is of no importance that some components of that pay discriminate in favour of women provided that this is compensated for by equally discriminatory pay components in favour of men.”

“The third and fifth questions 31 Secondly, the Court of Appeal wishes to ascertain, in substance, whether equal pay must be ensured at the level of each element of remuneration or only on the basis of a comprehensive assessment of the consideration paid to workers. 32 … 33. As regards the second of those questions, it is appropriate to refer to the judgments of 30 June 1988 in Commission v. France (Case 318/86) [1988] E.C.R. 3559, 3582, para. 27, and of 17 October 1989 in Handels-og Kontorfunktionaerernes Forbund i Danmark v. Dansk Arbejdsgiverforening (Case 109/88) [1991] I.C.R. 75, 80, para. 12, in which the court emphasised the fundamental importance of transparency and, in particular, of the possibility of a review by the national courts, in order to prevent and, if necessary, eliminate any discrimination based on sex. 34. With regard to the means of verifying compliance with the principle of equal pay, it must be stated that if the national courts were under an obligation to make an assessment and a comparison of all the various types of consideration granted, according to the circumstances, to men and women, judicial review would be difficult and the effectiveness of article 119 would be diminished as a result. It follows that genuine transparency, permitting an effective review, is assured only if the principle of equal pay applies to each of the elements of remuneration granted to men or women. 35. The answer to the third and fifth questions submitted by the Court of Appeal must therefore be that it is contrary to article 119 of the Treaty for a man made compulsorily redundant to be entitled to claim only a deferred pension payable at the normal pensionable age when a woman in the same position is entitled to an immediate retirement pension as a result of the application of an age condition that varies according to sex in the same way as is provided for by the national statutory pension scheme. The application of the principle of equal pay must be ensured in respect of each element of remuneration and not only on the basis of a comprehensive assessment of the consideration paid to workers.”

“30 I concur with the Finnish Government's view that it is not possible to lay down an unvarying rule that different elements of pay either should or should not be taken into account in making a pay comparison. However, whereas the Finnish Government submits that the rule will vary depending on factors arising out of the assessment of equal value, I consider that it is rather the nature of the pay structure at issue which will determine how equal pay is to be assessed. 31 Treating each element of remuneration independently for the purpose of an equal pay comparison will in general be the only proper way to ensure equality. It is moreover the only way to achieve transparency and ensure effective judicial review: as the court confirmed in Handels- og Kontorfunktionærernes Forbund i Danmark v Dansk Arbejdsgiverforening, acting on behalf of Danfoss (Case 109/88) [1991] ICR 74, 79, para 12, and repeated in Barber [1990] ICR 616, 671, para 34, a lack of transparency would prevent any form of supervision by the national courts. Thus as a general proposition I consider that, in accordance with the statement of the court in Barber, the principle of equal pay should apply to each of the elements of remuneration granted to men and women. 32 Where, however, for historical or other reasons the pay structures are complex, so that individual elements or the bases on which they are granted are difficult or impossible to disentangle, it may be both unrealistic and unprofitable to look at individual components of the pay package in isolation. Moreover, to do so may lead to discrimination against the other sex. In such cases a global assessment may be the only valid—or even feasible—method, pending a restructuring of the system. It is doubtless such circumstances which the court had in mind when it stated in Specialarbejderforbundet i Danmark v Dansk Industri, acting for Royal Copenhagen A/S (Case C-400/93) [1996] ICR 51 that some pay systems were so structured that only a “global assessment” could be made in considering whether there was a breach of article 119 : see p 69, para 18 and p 74, para 43. 33 That does not mean, however, that one element in the overall package can necessarily be set off against another. Thus in Barber itself, in which men who had been made redundant were entitled to an immediate pension if they had attained the age of 55 whereas women who had been made redundant were entitled to an immediate pension if they had attained the age of 50, it is understandable that the court regarded it as inappropriate to seek to offset discriminatory pension rights by taking into account possible differences in redundancy payments. 34 What then is the position here? It will be recalled (see paragraph 16 above) that a woman employee establishes a prima facie case of infringement of the principle of equal pay for work of equal value by showing, first, that she is part of a group of predominantly female employees performing work of equal value to that performed by a group of predominantly male employees and, secondly, that the first group receives lower remuneration than the comparator group. It is then, however, open to the employer to displace that presumption by showing that the difference in pay is based on objectively justified factors unrelated to any discrimination on grounds of sex. 35 In this case it is possible to separate the midwives' basic salary from the supplement and hence to compare the basic salary with that of the comparator. In my view, the correct approach to this and similar cases is to accept that the group receiving lower basic pay, in the present case the midwives, is paid less, so that the second question set out above, namely whether the pay of the two groups is unequal, is regarded as receiving an affirmative answer. I would add that that approach would in this and similar cases ensure greater transparency: the fact that the supplement varies from month to month depending on the time and the day the relevant shifts were worked would make it difficult to make a sensible comparison of, on the one hand, a midwife's aggregate salary and supplement and, on the other hand, the comparator's basic salary. … 39 It is accordingly my view that, where the pay structure is such that it is in principle possible to extract and compare individual strands, that is what should be done, with the employer preserving the possibility of disproving that inequality on that basis is due to sex. Where however the pay structure is less penetrable, a global assessment will be all that is possible. It is for the national court to determine whether it is possible in a given case to make an item-for-item comparison or whether a global assessment is all that is feasible.”

“43 With regard to the method to be adopted, in making such a comparison, for verifying compliance with the principle of equal pay, the Court of Justice has already held that if the national courts were under an obligation to make an assessment and a comparison of all the various types of consideration granted, according to the circumstances, to men and women, judicial review would be difficult and the effectiveness of article 119 would be diminished as a result. It follows that genuine transparency, permitting effective review, is assured only if the principle of equal pay applies to each of the elements of remuneration granted to men or women: Barber [1990] ICR 616, 671, para 34. 44 In this case, therefore, in order to ensure greater transparency and guarantee compliance with the requirement of effectiveness underlying Directive 75/117, the midwives' monthly basic salary should be compared with the like salary of clinical technicians. 45 The fact that the inconvenient hours supplement varies from month to month according to the part of the day during which the hours in question were worked makes it difficult to make a meaningful comparison between, on the one hand, a midwife's salary and supplementary allowance, taken together, and, on the other hand, the basic salary of the comparator group.”

“It appears to me that it would be natural to compare the appellant's basic salary as set out in her contract with the basic salary determined under the men's contract. I think it would be natural to treat the provision relating to basic pay as a term in each of the contracts. However, one has to take account of the hours to be worked in order to earn this money and I think this consideration points to the importance of the provision in question being one which is capable of being compared from the point of view of the benefit it confers with a corresponding provision in another contract to see whether or not it is more beneficial than that provision. Accordingly, I am of opinion that the natural application of the word "term" to this contract is that it applies for example, to the basic pay, and that the appropriate comparison is with the hourly rate of basic pay.”

“In my opinion the terms of article 1 are consistent with the appellant's submission. When elimination of all discrimination on grounds of sex is to be applied to all aspects and conditions of remuneration I consider this requires each of these aspects to be considered and discrimination existing in any aspect to be eliminated irrespective of the other aspects. It does not appear to me to be a natural reading of article l to say that if the remuneration as a whole provides the same result for a man and a woman it does not matter that some aspects of the remuneration discriminate in favour of the woman so long as there are corresponding discriminations in other aspects in favour of the man.”

“ … it imposes upon the word "term" a meaning which I myself do not regard as its natural or ordinary meaning. If a contract contains provisions relating to (1) basic pay, (2) benefits in kind such as the use of a car, (3) cash bonuses, and (4) sickness benefits, it would never occur to me to lump all these together as one "term" of the contract, simply because they can all together be considered as providing for the total "remuneration" for the services to be performed under the contract. In truth, these would include a number of different terms; and in my opinion it does unacceptable violence to the words of the statute to construe the word "term" in sub-paragraph (ii) as embracing collectively all these different terms.” 330. Lord Goff added at 908A-B: “You look at the two contracts: you ask yourself the common sense question - is there in each contract a term of a similar kind, i.e. a term making a comparable provision for the same subject matter, if there is, then you compare the two, and if, on that comparison, the term of the woman's contract proves to be less favourable than the term of the man's contract, then the term in the woman's contract is to be treated as modified so as to make it not less favourable.”

“53 As already indicated, the term relied on by the claimants is that which entitles them and their comparators to basic pay. There is no definition of the word 'term' in the EA 2010. In Hayward v Cammell Laird Shipbuilders Ltd [1988] IRLR 257 (which concerned different terms relating to both basic pay and the calculation of overtime), Lord Mackay of Clashfern LC addressed the meaning of 'term' in the context of the predecessor section in the Equal Pay Act 1970, at 900G as follows: 'I am of the opinion that the natural meaning of the word “term” in this context is a distinct provision or part of the contract which has sufficient content to make it possible to compare it from the point of view of the benefits it confers with similar provision or part in another contract.' As Lord Goff in the same case made clear, where the contract makes discrete provision for basic pay, bonus, and other benefits, those discrete provisions cannot be lumped together as one term of the contract merely because they provide for total remuneration. The emphasis must be on the reality of the contractual provisions in the circumstances of the particular case, and it will be a question of fact in each case whether a discrete term exists for these purposes. It is not permissible to seek to offset one more favourable term against another less favourable one. A term by term analysis is required, as illustrated by Brownbill v St Helens and Knowsley Hospitals NHS Trust [2011] EWCA Civ 903, [2011] IRLR 815 (CA). 54 I agree with (counsel for the employer) that s 66 EA 2010 dictates that just as an employer cannot lump together or engage in an overall comparison of different terms, a claimant in an equal pay claim cannot subdivide a single term into two or more parts in order to complain about one part only. A term by term analysis is required in equal pay cases. There is no distinct provision or part of the claimants' contracts providing for 'variable pay' above the minimum point in each relevant grade and none is relied on by (counsel for the employee). The reality of the contractual pay provisions in this case is that they are indivisible into sub-terms and to the extent that average pay is considered, average total pay is the only relevant consideration.”

“33 In my judgment, the approach in Bestrustees v Stuart [2001] Pen LR 283 represents in general the principled approach for reasons which Neuberger J gives, and provides the guiding principles in this situation. Accordingly, the court should, where possible, give effect to Barber rights by adhering to the provisions of the relevant scheme where it is possible to do so in preference to some other approach. If some departure is required, it should in general, so far as practicable, represent the minimum interference with the scheme provisions. This approach is not limited to the situation where members have been led to believe that a provision will be used in a certain way or a stated aim of a provision has been only imperfectly achieved (as in Bestrustees v Stuart itself). As the judge in this case recognised, it is a principle of more general application. 34 However, in determining what “minimum interference” is, regard must in my judgment be had to substance as well as form. Accordingly the court should consider not just the extent of any textual amendment required to the rules of the scheme to enable effect to be given to Barber rights, but also the substantive effect of the amendment so adopted. In this case, the implementation of the rights of members with mixed NRDs on the judge's approach involved taking away the company's right to give or withhold its consent to early retirement, or to give its consent on terms. Likewise his solution ended up giving those entitled to Barber rights far more than they were entitled to under European law: they acquired the right to non-reduced benefits on early retirement in respect of pension entitlement accrued outside the Barber window. Those factors cannot be ignored. The only effect of European law on benefits is to impose a NRD of 60 for pension entitlements accrued during the Barber window. The scheme should in general only be treated as amended to the extent necessary to make those rights effective. This principle of minimum interference with the scheme's provisions should be applied on the basis that minimum interference takes account of the substance and not simply the form of any notional amendment to the rules. 35 It follows from the approach of minimum interference that the court has to compare possible options and consider in relation to any particular option whether the Barber rights can be given effect in some other way involving less interference with the rights of any party, again determining the substance and not just the form of the interference. Whether a particular solution is appropriate in any given case will depend on the circumstances of the pension scheme in question.”

“Domestic legislation has been introduced to cover the point, but it does not circumscribe any more narrowly the range of choice open to the employer and the trustees in making the necessary modifications. Accordingly it is fair to regard the employer and the trustees as having a reasonable margin of discretion in this respect.”

“How the imbalance is to be redressed, or is to be regarded as having been redressed, in any given case may depend on the particular rules of the scheme. However, in principle, it seems to me that Neuberger J's approach in Bestrustees v Stuart [2001] Pen LR 283 that “minimum interference by the courts is desirable” is undoubtedly correct (see the passage quoted by Arden LJ, at para 30 above), and minimum effect, here, refers to the extent of the substantive effect rather than to the extent of the drafting exercise. The corrective effect of article 141 EC, as applied in the Barber and Coloroll cases, is to ensure equality of benefits as between male and female employees and scheme members, to the extent required by the two cases, but not anything more than that. Minimum change might require extensive amendments to the drafting of the rules, whereas fewer textual changes might result in a greater substantive alteration. I agree with Arden LJ that the minimum alteration required should start with the modifications made already by way of equalisation for the future, in 1993, and should proceed from there but making no greater additional alteration to the scheme than is necessary to achieve full conformity with Community law as declared in article 141 EC, the Barber and Coloroll cases.”

“In principle the necessary modifications ought to be agreed between the trustees and the employer and given effect by an amendment under the power in the trust deed, though clearly section 65 of the Pensions Act 1995 gives the trustees a reserve power to act on their own if the agreement of the employer cannot be obtained. If problems arise that cannot be resolved otherwise, then clearly the trustees, the employer or one or more beneficiaries can apply to the court, as in the present case. I hope that this will be necessary only in rare cases.”

“Fourthly, the objective of art.119 during the period when the Barber window is open is concerned with levelling up the rights of the disadvantaged class to those enjoyed by the advantaged class, but not with giving either the advantaged class more generous rights than they previously enjoyed, still less giving the disadvantaged class more generous rights than previously enjoyed by the advantaged class. This is, Mr Green submits (and we agree), the effect of the second and third principles described above. It also reflects what may be described as a principle of minimum interference with domestic rights, where a directly applicable EU right is to be applied, as explained by Arden LJ in Foster Wheeler v Hanley [2009] EWCA Civ 651, at [33]: “Accordingly, the court should, where possible, give effect to Barber rights by adhering to the provisions of the relevant scheme where it is possible to do so in preference to some other approach. If some departure is required, it should in general, so far as practicable, represent the minimum interference with the scheme provisions.” ”

“24A Conversion of guaranteed minimum pension into other benefits: introduction In this section and sections 24B to 24H– (a) the rules specified in sections 13(1)(a) and (b) and 17(1) are referred to as the “guaranteed minimum pension rules”, (b) “GMP conversion” means amendment of the scheme in relation to an earner so that it no longer contains the guaranteed minimum pension rules, (c) a “GMP-converted scheme” is a scheme which has been subject to GMP conversion, (d) “the conversion date” means the date on which that amendment takes effect, (e) “the pre-conversion benefits” means the benefits provided under the scheme immediately before the conversion date (disregarding money purchase benefits), (f) “the post-conversion benefits” means the benefits which are provided under the converted scheme (disregarding money purchase benefits), (g) “the converted scheme” means the scheme as it has effect immediately after conversion, and (h) “the trustees” in relation to a scheme means the trustees, managers or other persons responsible under the scheme for effecting amendments of it. 24B The conversion conditions (1) This section specifies the conditions referred to in sections 13(1A) and 17(1A) (for exemption from the requirement to guarantee a minimum pension). (2) Condition 1 is that the post-conversion benefits must be actuarially at least equivalent to the pre-conversion benefits. (3) Condition 2 is that if the earner was entitled immediately before the conversion date to the payment of a pension under the scheme, the converted scheme does not provide for a reduction of, or have the effect of reducing, the amount of that pension immediately after conversion. (4) Condition 3 is that the post-conversion benefits must not include money purchase benefits, apart from any money purchase benefits provided under the scheme immediately before the conversion date. (5) Condition 4 is that the converted scheme provides survivors' benefits in accordance with section 24D in such circumstances, and during such periods, as are prescribed by regulations. (6) Condition 5 is that the procedural requirements of section 24E have been complied with. (7) In applying these conditions to a scheme in respect of an earner– (a) it is immaterial whether or not on the conversion date the scheme was also converted in respect of other earners, and (b) it is immaterial (except for Condition 2) whether or not on the conversion date the earner was entitled to the payment of a pension under the scheme. 24C Actuarial equivalence Regulations may make provision for determining actuarial equivalence for the purpose of Condition 1 of section 24B. 24D Survivors' benefits (1) This section specifies the benefits mentioned in Condition 4 of section 24B. (2) The first benefit is that if the earner dies is a man married to a woman or a woman married to a woman in a relevant gender change case, and the earner dies (whether before or after attaining normal pension age) leaving a widow, she is entitled to a pension of at least half the value of the pension to which the earner would have been entitled by reference to employment during the period– (a) beginning with 6th April 1978, and (b) ending with 5th April 1997. (3) The second benefit is that if the earner is a married woman (other than in a relevant gender change case), a man married to a man, or a civil partner, and the earner dies (whether before or after attaining normal pension age) leaving a widower or surviving civil partner, he or she is entitled to a pension of at least half the value of the pension to which the earner would have been entitled by reference to employment during the period– (a) beginning with 6th April 1988, and (b) ending with 5th April 1997. (4) In relation to an earner who is a woman, a reference in this section to a relevant gender change case is a reference to a case where- (a) the earner is a woman by virtue of a full gender recognition certificate having been issued under the Gender Recognition Act 2004, and (b) the marriage of the earner and her widow (that ends with the earner’s death) subsisted before the time when the certificate was issued. (5) This section is subject to regulations under section 38A. In this section and sections 24B to 24H– (1). This section specifies the procedural requirements that must be complied with in order to satisfy Condition 5 of section 24B. (2). The employer in relation to the scheme must consent to the GMP conversion in advance. (3). The trustees must take all reasonable steps to– (a). consult the earner in advance, and (b). notify all members, and survivors, affected by the GMP conversion before, or as soon as is reasonably practicable after, the conversion date. (4). The Commissioners for Her Majesty's Revenue and Customs must be notified on or before the conversion date– (a) that the GMP conversion will occur or has occurred, and (b) that it affects the earner. 371. 24F Transfer out (1). Regulations may prescribe– (a). restrictions on the transfer of the earner's accrued rights under a GMP-converted scheme; (b). conditions which must be complied with on the transfer of the earner's accrued rights under a GMP-converted scheme. (2). Section 20(2) and (5) shall apply to regulations under this section. (3). Where a member of a non-GMP-converted scheme makes an application under section 95(1), the trustees may with his consent adjust any cash equivalent so as to reflect rights that would have accrued if the scheme had been subject to GMP conversion in accordance with Conditions 1 to 4 of section 24B. 377. 24G Powers to amend schemes (1). The trustees of an occupational pension scheme may by resolution modify it so as to effect GMP conversion (whether in relation to present earners, pensioners or survivors) in accordance with the conditions in section 24B. (2). The subsisting rights provisions within the meaning of section 67 of the Pensions Act 1995 (c. 26) shall not apply to a power conferred by an occupational pension scheme to modify the scheme in so far as the power enables GMP conversion in accordance with the conditions in section 24B. (3). Where a scheme is amended to effect GMP conversion the trustees may include other amendments which they think are necessary or desirable as a consequence of, or to facilitate, the GMP conversion. (4). Where an occupational pension scheme is being wound up, the trustees may, before the winding up is completed, adjust rights under the scheme so as to reflect what would have happened if the scheme had been subject to GMP conversion in accordance with Conditions 1 to 4 of section 24B. (5). In the application of section 24E by virtue of subsection (1) above, a reference to the earner includes a reference to a pensioner or survivor whose pension is subjected to GMP conversion. 383. 24H Enforcement of GMP conversion conditions (1). If the Regulatory Authority thinks that the conditions of section 24B have not been satisfied in relation to an amendment, modification or adjustment effected in accordance with any of sections 13(1A), 17(1A), 24F and 24G, the Regulatory Authority may make an order declaring the amendment, modification or adjustment void– (a). in respect of a specified person or class of person, (b). to a specified extent, and (c) as from a specified time. (2). Where the Regulatory Authority makes an order under subsection (1) it may– (a). require the trustees of the scheme concerned to take specified steps; (b). declare that specified action of the trustees shall not be treated as a contravention of the scheme if it would not have been a contravention if the order under subsection (1) had not been made. (3). An order may be made under subsection (1) before or after the amendment, modification or adjustment takes effect. (4). If the Regulatory Authority thinks that the process of effecting a GMP conversion of a scheme has been commenced and that a relevant condition of section 24B is not being complied with, or may not be complied with, the Regulatory Authority may by order– (a). prohibit the taking of further steps in the GMP conversion (whether generally or in relation to specified steps), and (b). require the trustees of the scheme to take specified steps before resuming the process of GMP conversion. (5). Section 10 of the Pensions Act 1995 (civil penalties) shall apply to a trustee who has failed to take all reasonable steps to secure compliance with the conditions of section 24B in relation to an amendment, modification or adjustment effected in accordance with any of sections 13(1A), 17(1A), 24F and 24G.”

“To the extent that members have in the past been paid lower benefits than would have been paid had one of the equalisation methods been implemented from 17 May 1990: (1) Is the Claimant as trustee obliged to make back-payments to the member? (2) If so, should back payments be made (i) going back 6 years (and if so, 6 years before what date), (ii) going back to 17 May 1990, or (iii) going back to some other date? (3) Should interest be added to the back-payments, and if so at what rate? (4) Should the calculation of cumulative benefits under Method C and Method D take into account only those back payments as allowed for under (b)-(c) above?”

“62.9 Failure to claim benefit No beneficiary shall be entitled to claim any instalment of pension or other benefit to which he is entitled under the Scheme more than 6 years after that instalment has fallen due for payment.” 403. Rule 2 provides: “9.5 Forfeiture of unclaimed benefits Any sum which may have become due to a Member or other person entitled to benefit under the Rules shall be forfeited if it has not been claimed during a period of at least six years from the date upon which that sum became due, but, if the sum formed one payment of a pension or annuity the right to such pension or annuity shall not thereby be extinguished.”

“16.3 Benefits not assignable Benefits under the Scheme are subject to restrictions imposed by Sections 91 to 93 of the Pensions Act 1995 (assignment and forfeiture, etc). These restrictions are intended generally to ensure that benefits are paid only to the person entitled under these Rules, rather than to any other person. The restrictions prevent benefits from being assigned, commuted, surrendered, charged, or forfeited, except in specified circumstances. However, there are exceptions to the restrictions imposed by Section 91 to 93. To the extent permitted by those exceptions: … 16.3.4. the Trustees will forfeit any benefit if the person entitled to the benefit does not claim it within six-years of the date on which it becomes due.” 406. Rule 5 provides: “8.2 Assignment, forfeiture, etc Benefits under the Scheme are subject to restrictions imposed by Sections 91 to 93 of the Pensions Act 1995 (assignment and forfeiture, etc). These restrictions are intended generally to ensure that benefits are paid only to the person entitled under these Rules, rather than to any other person. The restrictions prevent benefits from being assigned, commuted, surrendered, charged, or forfeited, except in specified circumstances. However, there are exceptions to the restrictions imposed by Sections 91 to 93. To the extent permitted by those exceptions: … 8.2.5 the Trustee may also reduce a person’s benefits, or decide that a person’s benefits will be forfeited, in any other circumstances allowed by sections 91 and 92 of the Pensions Act 1995. However, General Rules 8.2.1 and 8.2.4 do not apply to GMPs, and this General Rule 8.2 does not apply to any lump sum or instalment of pension that falls due for payment before the benefit otherwise ceases to be payable.”

“92.- Forfeiture, etc. (1) Subject to the provisions of this section and section 93, an entitlement to a pension under an occupational pension scheme or a right to a future pension under such a scheme cannot be forfeited. … (5) Subsection (1) does not prevent forfeiture by reference to a failure by any person to make a claim for pension— (a) where the forfeiture is in reliance on any enactment relating to the limitation of actions, or (b) where the claim is not made within six years of the date on which the pension becomes due. … (7) In this section and section 93, references to forfeiture include any manner of deprivation or suspension.”

“21.- Time limit for actions in respect of trust property. (1) No period of limitation prescribed by this Act shall apply to an action by a beneficiary under a trust, being an action— (a) in respect of any fraud or fraudulent breach of trust to which the trustee was a party or privy; or (b) to recover from the trustee trust property or the proceeds of trust property in the possession of the trustee, or previously received by the trustee and converted to his use. … (3) Subject to the preceding provisions of this section, an action by a beneficiary to recover trust property or in respect of any breach of trust, not being an action for which a period of limitation is prescribed by any other provision of this Act, shall not be brought after the expiration of six-years from the date on which the right of action accrued. For the purposes of this subsection, the right of action shall not be treated as having accrued to any beneficiary entitled to a future interest in the trust property until the interest fell into possession. … ”

“45 First, the Proviso should not be regarded as some freestanding rule, separate from the principle of equivalence. Rather it is part of the Court of Justice's expression of the principle of equivalence itself, directed to explaining the standard of treatment which that principle imposes upon member states when providing procedures for the vindication of rights based in EU law. What is required is that the procedure should be broadly as favourable as that available for truly comparable domestic claims, rather than the very best available. 46 Secondly, the Proviso is, like the principle of equivalence of which it forms part, best understood in the light of its purpose.”

“17 The guidance to be derived from these cases includes the following: (1) Interest is awarded to compensate claimants for being kept out of money which ought to have been paid to them rather than as compensation for damage done or to deprive defendants of profit they may have made from the use of the money. (2) This is a question to be approached broadly. The court will consider the position of persons with the claimants' general attributes, but will not have regard to claimants' particular attributes or any special position in which they may have been. (3) In relation to commercial claimants the general presumption will be that they would have borrowed less and so the court will have regard to the rate at which persons with the general attributes of the claimant could have borrowed. This is likely to be a percentage over base rate and may be higher for small businesses than for first class borrowers. (4) In relation to personal injury claimants the general presumption will be that the appropriate rate of interest is the investment rate. (5) Many claimants will not fall clearly into a category of those who would have borrowed or those who would have put money on deposit and a fair rate for them may often fall somewhere between those two rates. 493. 27 The Appellant's arguments in this case highlight the importance of the principle that the court does not inquire into the detailed financial position of the claimant, but looks only at general or class attributes. To examine properly, for example, the claimant's financial position throughout the relevant period; the borrowing carried out by her, when and on what terms; whether and how she needed so to borrow; the uses to which she might otherwise have put the money and the financial consequences of so doing; the extent to which any of these matters were known or in the reasonable contemplation of the Respondent etc. would have required a mini or indeed major trial, consumed significant time and expense and may well not have resulted in definitive answers. The broad approach which the court adopts is fair, practical and proportionate.”

“If the required or chosen method of equalisation is one of Methods A to D, should a different method be adopted for those members for whom the estimated cost of calculating and implementing Methods A to D is the same as or greater than the projected additional benefits to which the members would be entitled as a result of equalisation? If so, (a) what should that different method be, and (b) how is the Trustee to ascertain the members to which that method should be applied?”

“If the Claimant as Trustee is under an obligation to equalise for the effect of unequal GMPs, then in principle: (1) Does the Claimant's obligation apply to benefits accrued in other schemes during the Barber window which have been transferred in to any of the Schemes? (2) Leaving aside the effect of any contractual obligation that may have been undertaken in relation to particular transfers out of the Schemes, does the Claimant's obligation apply in relation to benefits accrued in any of the Schemes during the Barber window which have been transferred out of the Schemes, and if so what does that obligation require? (3) If the answer to Issue 13(b) is yes, is that such an obligation applies, is that “in principle” obligation discharged (and thus not enforceable by relevant Scheme members) either (i) under s 99 PSA 1993 and/or by reason of s 73(2) and (4) PSA 1993? (ii) under transfer out provisions in the relevant Scheme rules?”