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Court of Appeal rules that pensions disputes can be settled
In a judgment which has been eagerly awaited by the pensions industry - as well as by employment lawyers - the Court of Appeal has reversed Mr Justice Arnold's decision in a case involving the pension plan of International Management Group ("IMG") that a provision in the Pensions Act 1995 prevented the settlement of disputes concerning pensions entitlements.
Lord Justice Mummery - giving the unanimous decision of the Court - ruled that section 91 of the Act, which states that entitlements or rights under a pension scheme cannot be surrendered, did not apply to compromises or settlements involving bona fide pensions disputes. The Court will in due course give its full reasons in a written judgment.
Hugh Arthur, Head of Pensions at Macfarlanes, which acted for IMG on the appeal, said that it was one of the most important pensions cases since the introduction of the Pensions Act in 1997.
"If the High Court's decision had been allowed to stand, it would have meant that virtually every single pensions dispute would either have needed to be referred to the Pensions Ombudsman or to Court for a determination of the entitlement or would have been left in capable of resolution, with no middle-ground where the parties could simply agree to settle their differences.
Apart from rendering illegal a large part of the function of The Pensions Advisory Service (not to mention IDRP processes), the inability to compromise pensions disputes in a sensible way would have led to vastly increased litigation, as if there were not enough pensions issues coming before the courts anyway."
Lorna Emson, pensions litigation solicitor at Macfarlanes, added that without the Court of Appeal ruling, the validity of hundreds of different sorts of existing pensions settlements dating back to 1997, including those previously blessed by the court, would have been cast into doubt.
For further information please contact Hugh Arthur.
Ends
Macfarlanes' pensions team advises companies and trustees on all aspects of pensions work. The firm is currently advising on one of the first funding disputes involving possible use of the Pensions Regulator's determination powers.
22 June 2010
