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More questions about “pensionable service” and a triumph of common sense

G4S plc Case

A case concerning a multi-employer scheme and whether an employer still had staff who were active members, if the employer had individuals who had a final salary link. For example, their pension benefits continued to increase by the higher of statutory revaluation and the actual increase in salary which was paid by an employee’s employer while that employee remained contracted by the employer. 

However, such employees’ pensionable service ceased to increase any further – there were only potential increases to their pensionable salary.

Mr Justice Nugee, a former pension QC, firmly deduced that such individuals were deferred members, not active members of the scheme. 

This is a pleasing result as it both corresponds with earlier case law and it reflects how the vast majority of pension lawyers have historically advised their clients. The case was brought to court to give the trustees and employers certainty about what process to go through to trigger a Section 75 statutory debt that one employer wanted to discharge. 

That said, many advisers have already given advice on this point as well without encouraging their clients to incur the expense of going to court to obtain further absolute clarity on the point. 

Not so pleasingly, the statutory definition of pensionable service used to determine this case is different from the statutory definition of pensionable service used to determine the Pension Protection Fund (PPF) Beaton case

This type of lazy drafting by Parliamentary drafts-people is unhelpful for all concerned and leads to added confusion in an area that is already notorious for its complexity.

Published: July 2018

Pensions Law Update - July 2018

Key Contact

Penny Cogher