UK - Independent trustees Pitmans will have to conduct a second actuarial valuation for the Roxspur final salary scheme after the High Court vetoed the first.
Pitmans’ valuation showed a £4.4m deficit but the court vetoed it because the sponsoring employer was not given enough time to respond to the revised statement of investment principles.
The court battle was instigated by Pitmans, which took action against The Telecommunications Group plc to recover a shortfall – under section 75 of the Pensions Act 1995 – in the defined benefit section of the Roxspur Pension Schemes.
But – prior to issuing a claim form through the courts – the trustees switched to a gilt-matched investment policy, giving the sponsoring employer just two days to consult over the proposed strategy switch.
After the adoption of the new investment strategy, the scheme actuary certified a £4.4m deficit. Pitmans then submitted a claim form through the courts to recover the shortfall.
Roxspur did not pay and, instead, issued a defence and counterclaim arguing that the employer was not liable for the final salary scheme’s deficit and that the two sections of the Roxspur Pension Schemes should be considered as two separate schemes.
The vice-chancellor, Andrew Morrett – who presided over Pitmans Trustees v The Telecommunications Group plc – dismissed the employer’s two counterclaims but vetoed the scheme actuary’s deficit valuation.
Morrett ruled that the timescale given for the employer to respond to the revised statement of investment principles was “wholly inadequate” and that it “was not validly adopted”.
Morrett concluded that without a valid SIPs or deficit valuation it was “not necessary to reach a final conclusion in this case”.
In his final judgement he said: “The failure to consult vitiated both the adoption of the revised SIPs and the actuary’s certificate. It follows that the debt on which the trustees rely has not been established in accordance with [section 75] and their claim must be dismissed.”
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