Key Facts
- •Avon Cosmetics Pension Plan (the "Plan") was amended (CARE Amendments).
- •The amendments affected accrued benefit rights of continuing employees.
- •Accrued rights were initially measured by final salary, the amendment changed this to a Career Average Revalued Earnings ("CARE") basis.
- •The amendment potentially prejudiced some members ("FS Winners"), while benefiting others ("Revaluation Winners").
- •The Plan's trust deed contained a power of amendment with a fetter preventing prejudicial amendments to existing rights.
- •A compromise was reached regarding the FS Winners.
- •The court was asked to determine the validity of the amendment for Revaluation Winners, assuming it was invalid for FS Winners.
Legal Principles
Construction of pension trust deeds
Re Courage Group’s Pension Schemes [1987] 1 ALL ER 528, Network Rail Infrastructure Ltd v ABC Electrification Ltd [2020] EWCA Civ 1645
Severance
Pitt v Holt, Egon Zehnder Limited v Tillman [2019] UKSC 32, DPP v Hutchinson [1990] 2 AC 783
Scope of powers; inadequate deliberation; improper purposes
Pitt v Holt, Eclairs Group Ltd v JKX Oil & Gas Plc [2015] UKSC 71
Outcomes
The CARE amendment is valid as regards Revaluation Winners, assuming it's invalid for FS Winners.
The concepts of FS Winners and Revaluation Winners are sufficiently distinct. The substantial purpose of the CARE Amendments was to remove the final salary link; the part affecting Revaluation Winners remains within that objective intention even with the invalidity regarding FS Winners. There was no inadequate reasoning or improper purpose.
Representation orders granted.
The FS Winners and Revaluation Winners constitute classes with the same interest in the claim. Appointing representatives furthers the overriding objective.