A historic bid to equalise normal pension ages (NPAs) in the Safeway Pension Scheme should be quashed, the European Court of Justice (ECJ) has been advised.
In an opinion delivered yesterday (28 March), advocate-general Evgeni Tanchev recommended the court disallowed the defined benefit (DB) scheme's attempt, which could increase liabilities by more than £100m.
The scheme-specific case revolves around a scheme rule that says powers and provisions may be amended via a written announcement, where a supplemental deed is then executed in "any reasonable time".
Following the infamous Barber judgment in 1990, the scheme made such an announcement that it would increase the NPA for women to 65 - making it the same as for men - but then did not execute a deed effecting the change until May 1996.
Yet, in the so-called ‘Barber window' - the period between the 1990 judgment and a deed being executed - schemes were disallowed from "levelling down", or increasing, NPAs, but had to reduce NPAs, if they wished to do so.
In his official opinion, Tanchev said that, despite the scheme-specific rules, this meant that the NPAs could not be amended down, as Safeway had done, until 1996 when the deed was executed, even retrospectively.
While the opinion is non-binding, the ECJ often follows the advice of its advocate-generals - including in the landmark case against Pension Protection Fund compensation last year.
Taylor Wessing partner Mark Smith said the judgment would probably have "not that much" impact on other schemes, as it had been "clear for many years" that NPAs could not be retrospectively worsened within the Barber window.
"This case represented a thoughtful way to see if that principle still applied where a scheme's amendment power allowed for amendments to be made by deed, but expressly allowed for that to be by reference to an earlier announcement," he said.
"So, it would only be other schemes that had a similar amendment power - and many don't - that will have been watching on with particular interest."
But he added that the judgment does not disallow schemes to equalise, or make amendments via announcement, if they do not interfere with equal treatment laws.
DLA Piper pensions legal director Simon Evans added members were getting an "unexpected windfall" because of this, and similar, cases.
He added: "This [judgment] means members will receive higher benefits than expected and that the employer (now Morrisons) will have to pay more to fund those benefits.
"This is despite the employer clearly having flagged the 'offending' change in 1991 and, not unreasonably in my view, having assumed that there was no urgency to formally document the change in question."
The High Court had previously ruled the same way as Tanchev's opinion, but the decision was appealed to the Court of Appeal, which requested the ECJ's judgment.
No date has yet been set for the ECJ's decision and, once that has been given, the case will return to the Court of Appeal to deliver a final judgment, as well as deliberate on whether the amendment was contrary to equal treatment provisions under section 62 of the Pensions Act 1995.
The case is likely to be the final UK pensions case heard by the ECJ before the UK leaves the European Union.
See also: The pension court cases to watch in 2019
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