This was an appeal to the Court of Appeal which involved a case where a pension scheme booklet contained different (and incorrect) information about a member’s normal retirement date from the provisions of the scheme’s rules.
Mr Hutchison (Mr H) was a member of the Steria Management Plan (the Scheme). Mr H’s complaint raised a number of matters only one of which was upheld by the Pensions Ombudsman (PO). That issue was whether Mr H’s normal retirement date was to be treated as 62 (which was what the Scheme booklet stated) even though that was not his normal retirement date under the Scheme’s rules. The Employer and Trustees of the Scheme appealed to the High Court and then to the Court of Appeal on the grounds that the PO’s decision that Mr H’s retirement date should be treated as 62 was wrong as a matter of law.
Mr H started working for his employer on 7 October 1974 and joined a pension scheme offered by the employer. Upon his promotion to management level in 1994, he was invited to join the Scheme (a management scheme offering superior benefits). He was invited to transfer the service which he had accrued in the former pension scheme to the Scheme.
He was told in a letter sent by his employer, and on behalf of the Trustees, that if he had 20 years pensionable service, he could retire early, aged 62, without actuarial reduction. The letter also enclosed a Scheme booklet, the purpose of which was to give “clear and concise information” about the Scheme. The booklet contained two key provisions:
But, in fact, the Scheme’s early retirement rules provided that a member could retire with the agreement of the employer before NRD (but after age 50) but a reduction as provided for by the Actuary would apply. Certain members who had completed 20 years’ service could receive a pension aged 60 without actuarial reduction. In other words the rules provided for a normal retirement date of either 65 or 60. No provision existed for the normal retirement date purportedly offered to Mr H.
Subsequently, in 2002, Mr H received a benefits statement and other communications from his employer’s pensions department indicating that his normal retirement age was 65 rather than 62. Mr H queried this and then took the matter to the PO.
The Pension Ombudsman was satisfied that Mr H was entitled to rely on his letter and the Scheme booklet so that on completion of 20 years of pensionable service, his retirement date would be age 62. This was based on a reasonable understanding of the provisions provided for on the terms of the letter and the Scheme booklet.
The Judge held that the question as to which prevailed, i.e. Scheme booklet or Trust Deed and Rules, was a point which the PO did not address. It was therefore a matter the Judge could decide in the context of the appeal before him.
The Judge concluded that the argument put forward on behalf of the Employer and the Trustees amounted to claiming that the Information Notice negated the clear and unambiguous representations made to Mr Hutchison that he could retire without reduction at age 62.
He decided that, where the information contained in a booklet is not of a technical or difficult nature, it is not legitimate for the Trustees to say that the fact that the booklet contains a statement that the trust deed and rules prevail over the terms of the booklet automatically disallows a claim for estoppel. There may, however, be some instances where it is reasonable for the Trustees to rely on a statement such as the Information Notice.
The Court of Appeal disagreed with the High Court’s conclusions.
In the judgment the following main points were made:
1. Mr H had not established the requirements of estoppel.
When read as a whole and in context, neither the 1994 letter nor the Scheme booklet made the representation or promise of an alteration of Mr H’s NRD from 65 to 62.
(The representation or promise was that, in the stated circumstances, pension benefits could be taken at age 62 without actuarial reduction. One of the circumstances was that the early retirement was to be with the consent of the Employer. There was no statement in the information referred to that the Employer or the Trustees were giving or would give consent to early retirement at age 62 on unreduced pension benefits.)
Mr H had not relied to his detriment on the alleged representations.
(The PO did not expressly address this issue and the Court of Appeal was unable to agree with the High Court’s conclusion that detriment was established by the loss of the ability of Mr H to reduce his pension contributions if he so wished and “in giving up his rights to revert to a lower percentage contribution”.)
2. The Information Notice made it impossible for Mr H to establish reliance on the statements as if there were any inconsistencies between the explanatory information and the formal legal documents, the latter prevailed.
Appeal allowed. The directions made by the PO for the trustees to treat Mr H as having a NRD of 62 and for the payment of £250 were both set aside.
This decision will be welcomed by trustees and employers as it reinstates the previous line of case law to the effect that a statement that a document is a summary and that the trust deed and rules are overriding should, in the normal course of events, defeat a claim based on estoppel.
+44 (0)20 7329 6699
enquiries@sackers.com
20 Gresham Street, London, EC2V 7JE - 
