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Pensions Insights – September 2020

30 September 2020
In our monthly update, Pensions Insights, we give you our take on the latest highlights in the world of pensions law and policy. If you have any queries about any of the issues covered, or you require advice on a pensions related matter, please do not hesitate to get in touch with your usual contact.

Case Law

Rectification granted for error in SPS Technologies Limited v Moitt and others
The High Court judgement in SPS Technologies Ltd v Moitt has now been handed down. This case regarded the rectification of three documents that governed the SPS Technologies UK Pension Plan, the 1998 Rules, the 1999 Rules and the 2003 Deed of Amendment.

The Plan's principal employer sought serial rectification of successive deeds on the basis that an error in the 1998 Rules became embedded and carried through to the 1999 Rules and the 2003 Deed of Amendment. 

The error related to the early retirement provisions for certain members. The Rules that preceded the 1998 Rules provided that this category of members was only entitled to take early retirement if in pensionable service and with the consent of the employer. There was no entitlement to take early retirement from deferred status. The position was to be changed in the 1998 Rules to allow  members to have an entitlement to take early retirement from the age of 60 whether in pensionable service or having deferred status, and in either case an actuarial reduction would apply.

What actually happened was that the drafting of the 1998 Rule created a difference between early retirement for these members. The rule was incorrectly drafted such that if a member in this category took an early retirement pension from deferred status from age 60 , the actuarial reduction was disapplied entirely. By contrast, the rule dealing with early retirement from pensionable service included a provision for the actuarial reduction to apply. As a result, members who had left pensionable service would benefit to a greater extent than those who retired early from active service with the employer. 

In order to allow rectification the court requested 'convincing' proof that an error occurred in 1998, such that it remained embedded through two further changes to the Plan. 

In this case the Plan's power of amendment could be operated unilaterally by the principal employer therefore it was only its intention that was relevant, however the trustees had also executed all of the relevant documentation.

It was decided that:

  • The terms of the 1998 Rules did not reflect the intention of the principal employer which was proven through documents showing an inconsistency in the instructions to their solicitors and what resulted.
  • The structure of the Plan was inherently illogical as drafted as members could trigger deferred status to gain access to an unreduced benefit.
  • There was a lack of any commercial reason for the Plan's principal employer to provide more generous benefits to deferred members than those in pensionable service.
  • There was an absence of any evidence that the Plan's principal employer or Trustees intended the actuarial reduction to be entirely disapplied on early retirement from deferred status, and the Plan had, at all material times between the execution of the 1998 Rules to the discovery of the error in 2009, been administered on the basis that the actuarial reduction has been applied in the same way whether benefits were taken from deferment or pensionable service. 

Based on this, it was held that the 1998 and 1999 Rules and the 2003 Deed were to be rectified. 

New Law  

Pension Schemes Bill progressing 
With a recent announcement that the Pensions Schemes Bill is expected to make swift progress and to come into force before the end of the year it is understood the Bill this is to get its second reading in in the House of Commons on 7 October 2020.

Once enacted this legislation will, amongst other things, extend The Pensions Regulator's enforcement powers and introduce new criminal sanctions as well as paving the way for collective defined contribution schemes and the pensions dashboard.


TPR Updates COVID-19 guidance
The Pensions Regulator (“TPR”) has recently updated its COVID-19 guidance. At the start of the pandemic, TPR extended the maximum period that defined contribution pension schemes and trustees had to report late contribution payments from 90 to 150 days.. The new guidance reflects the shift in businesses returning to a 'new' normal and TPR resuming its usual reporting and enforcement role. 

A summary of the updated guidance is as follows: 

  • From 1 January 2021, defined contribution schemes and providers will be asked to resume reporting late contribution payments no later than 90 days after the due date. This ensures that schemes will have sufficient time to adjust systems and processes for employers who have suffered the effects of the pandemic.
  • Employers should continue to make contributions in full and on time. The extension on the maximum period is designed as a proportionate approach to enforcement in light of the current pressure on employers. 
  • From 1 October, other types of enforcement will start to return to normal. This will include enforcing the requirement for schemes to submit audited accounts and investment statement reviews. 
  • Guidance for trustees considering employer requests for a reduction or suspension of Deficit Recovery Contributions remains unchanged at this time but remains under review in light of the evolving situation.
TPR has reportedly now begun investigations into a number of schemes where employer are suspected to have abused easements introduced in relation to contributions to DB schemes during the pandemic.

Minimum pension age on the up
With the normal minimum pension age at which benefits can be accessed currently being 55, it has now been confirmed that the Government's intention is to increase this so that with certain exceptions the earliest benefits can be accessed will be age 57 in 2028.  

Whilst the government has noted that the change will be announced well in advance to allow people to make financial plans, any pension scheme which have effectively "hard-coded" age 55 in their Rules may require to make adjustments in due course and ensure that the Rule operate as intended.


If you have any questions about any of the topics discussed, or pensions law in general, please get in touch with one of the below DWF contacts.

Further Reading