Killed off your star in Season 8? Stuck for season 9? Simply re-write history. Begin Season 9 with Patrick Duffy walking towel clad from the shower in Dallas, the eighties TV blockbuster. Season 8 (1984-85) was all a dream. Duffy stars in Season 9 (1985-86). But is rewriting history permissible?
On 18th February 1991 the trustees of the BIC UK Pension Scheme resolved to increase pensions annually by the lower of the Retail Price Index and 5%, a calculation known as 5% LPI, which stands for Limited Price Indexation. The question raised two decades later by BIC UK Ltd, the Scheme’s sponsoring employer, in 2011, and the focus of a recent High Court case, was whether such increases, or more particularly the increases applied in respect of pensions relating to service with the employer prior to 6 April 1997 (a period when there was no statutory obligation to provide increases to pensions), had been validly awarded.
Two key directors of BIC UK Ltd gave evidence, which was accepted, that BIC UK Ltd had been in agreement with the introduction of increases. The increases were part of an overall package to reduce the level of surplus below the statutory maximum level of 105% which applied at the time.
These were the days of shoulder pads, big hair and pension scheme surpluses. However, no “writing effected under hand” evidencing employer agreement, as required by the relevant rule, could be found.
The equitable maxim “equity regards as done that which ought to have been done”, so useful in the 2011 case HR Trustees vs Wembley, did not apply to the case.
Oh dear. Time to rewrite history.
In 1993, some two years and three months after the 18th February 1991 resolution, the trustees and the company entered into a new deed and rules for the Scheme, clause 1(a) of which stated that the new provisions took effect from a date six months before the resolution, on 6 August 1990. The new deed contained two powers under which the 1991 trustee resolution would be valid without any need to evidence employer consent and the new rules contained two further powers under which the trustee resolution, without any separate documentation evidencing employer agreement, would be valid and effective to grant 5% LPI.
With the company directors’ evidence, 20 years of paying 5% LPI, a rather good actuary’s letter, six actuarial valuations and a Statement of Funding Principles all clearly establishing that 5% LPI had been agreed by both trustees and the company “as a matter of historical record”, the judge was satisfied that the court could rewrite history. 5% LPI increases had in fact been decided upon and legitimately awarded.
Rewriting history is, as viewers of Dallas series 9 discovered, permissible.
The judge decided some further points, in case he was wrong in deciding that the amendments had been validly made because of the retrospective effect of the 1993 deed. One of those involved an acceptance of the company’s suggestion that recoupment of overpaid pension benefits did not involve a claim for the repayment of pension benefits, but operated by means of an adjustment to future pension instalments. This is relevant because it means that a six year limitation period would not apply (contrary to the position reached on this point in a 2014 case). Had the amendments not been validly made in this case, the full amount of the pre-1997 increases which had been paid to members could have been recovered, not just those paid during the six year period prior to the claim being made.