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Pensions Insights – August 2023

22 August 2023

In our monthly e-alert, Pensions Insights, we give you our take on the latest highlights in the world of pensions law and policy.

Case Law

British Broadcasting Corporation v BBC Pension Trust Ltd & Anor [2023] EWHC 1965 (Ch)

This case concerned the BBC Pension Scheme (“the Scheme”) in relation to which the BBC as Scheme sponsor was considering options for reducing ongoing costs including possible curtailment or removal of future service benefits.

The proceedings sought to define the limits within which the terms of the Scheme could be amended and centred around the Scheme's amendment power which gave a broad power to the Trustee, provided it acted with the consent of the BBC, to “alter or modify any of the trusts, powers or provisions of the Trust Deed or the Rules". 

The amendment power was subject to limitations including that no alteration could take effect in regards to Active Members “whose interests are certified by the Actuary to be affected thereby”, unless certain criteria (designed to ensure that “interests” were not substantially prejudiced) were fulfilled.

The critical issue therefore was what was meant by “interests”, and whether “interests” included future service benefits such that these could not be reduced.

The Court held that the term "interests" could be construed to include a final salary link, with the Judge stating that in his opinion the concept of interests is sufficiently broad to include, in a case where benefits have already accrued in light of past service, that aspect of such benefits which requires them to be revalued on an ongoing basis by relevant increases in salary while the Active Member is employed.

It was further decided that interest included the ability of members to accrue future service benefits under the Scheme on the same terms as provided for under the Scheme immediately before the amendment and the ability to accrue any future service benefits under the Scheme.

TPR decision to issue Contribution Notice for almost £2m upheld - Mr Anantkumar Meghji Pethraj Shah v The Pensions Regulator [2023] UKUT 00183 (TCC)

This case concerned the Meghraj Group of companies, including Meghraj Financial Services Limited (MFSL), which was the sponsoring employer of the Meghraj Group Pension Scheme (the "Scheme"), and had entered a creditors’ voluntary liquidation in October 2014 leaving the Scheme with a deficit of around £5.85 million.

The Pensions Regulator ("TPR") investigated a series of payments made from MFSL to its parent company, Meghraj Property Limited, which followed MFSL’s disposal of its shares in a joint venture company with most of the sums paid out as dividends.

TPR said these payments should have been used to fund the Scheme, the failure to do so was materially detrimental to the Scheme’s members and that it was reasonable to issue a Contribution Notice ("CN") against Anant Shah (a director of MFSL), and his nephew Rohin Shah. A Determination Notice was issued confirming a CN of £3,688,108 be issued against Anant and Rohin Shah jointly and severally.

Both Anant and Rohin Shah referred the decision to the Upper Tribunal (Tax and Chancery Chamber (the "Tribunal") which has responsibility for hearing challenges against certain regulators, including TPR. Prior to the hearing TPR settled its case against Rohin Shah.

The Tribunal agreed with TPR that it was reasonable Anant Shah pay under a CN, which included 50% of the sum that should have been paid into the Scheme, plus an uplift to take account of the passage of time since the acts in question.

The judgment also confirmed TPR’s position that the amount of a CN should be what is reasonable and is not limited to the loss to a scheme resulting from acts or inactions.

As a result Anant Shah will be required to pay £1,875,403 into the Scheme.

New Law 

Police Pensions (Remediable Service) Regulations 2023 and  Firefighters' Pensions (Remediable Service) Regulations 2023

On 28 February, the government launched consultations on the draft Police Pensions (Remediable Service) Regulations 2023 and the draft Firefighters’ Pensions (Remediable Service) Regulations 2023 to address the provisions needed to implement the second phase of the McCloud/Sargeant remedy (retrospective remedy).

The Regulations will make provision to remove the effect of the transitional protections in place between 1 April 2015 and 31 March 2022 (‘the remedy period’) and implement provisions for a deferred choice underpin ("DCU"). The DCU will give members a choice of pension benefits at their point of retirement or when the benefit comes into payment in respect of the remedy period, which is the period during which discrimination took place. Eligible members will be able to choose to receive legacy pension scheme benefits or benefits equivalent to those available under the 2015 reformed scheme for service during the remedy period.

The regulations also included provisions to correct any overpayment or underpayment of pension benefits or member contributions and facilitate the payment of appropriate compensation to address financial loss arising from the discrimination or operation of the remedy.

Subject to the necessary parliamentary approval, the provisions will come into effect from 1 October 2023.


TPR urges signposting to Midlife MOT

The government has launched an enhanced digital Midlife MOT provided online and through Job Centres in some parts of the UK, to enables workers in their 40s and 50s to take stock of their finances, skills and health.

TPR considers that taking the Midlife MOT should be seen as an essential part of the pensions journey and is urging pension schemes to signpost the offer to their members and has suggest that schemes should:

  • particularly target those in the 45 to 65 age range;
  • fully integrate the Midlife MOT into the support already offered to  members; and
  • provide a link to the Midlife MOT in signposting, so that DWP can capture from where visitors are being referred.
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 contact your usual contact.

Further Reading