Virgin Media Ltd v NTL Pension Trustees II Ltd & Ors
[2024] EWCA Civ 843
BBC v BBC Pension Trust Limited & Anor
28 July 2023
[2023] EWHC 1965 (Ch)
High Court
The court decided the BBC can change its pension plan for future benefits, but must follow the rules to make sure current employees aren't unfairly hurt. It's not enough just to get the employees' agreement; the plan's own safeguards must be followed too.
Key Facts
- •The British Broadcasting Corporation (BBC) brought a Part 8 claim concerning the treatment of future service benefits under the BBC Pension Scheme.
- •The claim involved two inter-related questions about the amendment power in Rule 19 of the Scheme's rules.
- •The BBC sought to limit the ongoing costs of funding the Scheme, which had increased significantly.
- •The defendants were BBC Pension Trust Limited (the Trustee) and a Representative Beneficiary for Active Members.
- •The key dispute centered on the interpretation of 'interests' in Rule 19.2(3) (the 3rd Proviso) and whether it encompassed future service benefits.
- •The Bradbury v. BBC litigation was relevant, concerning earlier amendments and the interpretation of 'pensionable pay'.
Legal Principles
Textual analysis is given weight in pension scheme interpretation, focusing on the words chosen by the draftsman.
Barnardo’s v Buckinghamshire [2018] UKSC 55
Pension scheme provisions should be construed to give reasonable and practical effect to the scheme.
Re Courage Group’s Pension Schemes [1987] 1 All ER 528
Where a clause has been re-adopted without change, it likely retains its original meaning.
Stena Line v MNRPF Trustees [2011] Pens LR 223
In interpreting fetters on amendment powers, the meaning of 'benefits secured by past contributions' includes the prospective entitlement to pensions based on final salary.
Re Courage Group’s Pension Schemes [1987] 1 WLR 495
Section 67 of the Pensions Act 1995 restricts detrimental modifications to 'subsisting rights', defined as accrued rights determined assuming termination of service.
Pensions Act 1995, s 67 and s 67 A(3), (6), (7)
Outcomes
The court answered Question 1 affirmatively for parts (a), (b), (c), and (d), finding that 'interests' in Rule 19.2(3) includes rights earned by past service, the final salary link, the ability to accrue future service benefits on the same terms, and the ability to accrue any future service benefits.
The court adopted a broad interpretation of 'interests', finding it encompassed the potential for future benefits. The court rejected the argument that 'interests' only included already accrued benefits.
The court answered Question 2 negatively, finding that exercising the amendment power to terminate future service accrual or engage in benefit redesign is not inherently an improper purpose.
The court distinguished this case from British Airways, emphasizing that the Trustee's actions must have the BBC's consent. The court held that compliance with the 3rd Proviso safeguards suffices, regardless of whether Active Members individually or collectively agreed to the changes.
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