Pensions “Black Hole” Deepens - Again.
As if the plunging stock market hasn’t reduced pension fund values enough, pensioners have been further hit by a recent ruling in the High Court which re-inforces pension funds’ discretion not to grant annual increases if they don’t have to.
The Prudential’s pension trustees had for many years followed a policy of uplifting pensions for pensioner members of the scheme, so that the pensions maintained their real value based on the Retail Prices Index. According to the trust deed of the pension scheme, this power was discretionary and the trustees decided to stop awarding these annual increases.
Darren Hendleman, Partner in our Private Client Team commented "The trustees changed the policy and no longer awarded the discretionary element of pension increases as before, but instead applied a 2.5 per cent ‘cap’ on pension uplifts.”
This raised the question of whether, given that members of the scheme had become accustomed to the increases, the change in policy could be regarded as a breach of its implied obligation to them.
Darren comments: “Despite the ‘very strong’ expectation of the scheme members, the Court ruled that there was no obligation to uplift pensions according to the prior policy.”
If you feel you may need advice Smith Sutcliffe can advise you on your rights. Call Darren Hendleman on 01282 426251 for further information.