Trustee Solutions Ltd and others v Dubery and another: [2007] EWCA Civ 771

CA: Ward and Tuckey LJJ, Sir Peter Gibson: 26 July 2007

The claimants were the trustees of a pension scheme. The scheme rules provided for a normal retirement date at age 65 for a male member and 60 for a female member. The principal employer went into creditors' voluntary liquidation on 1 November 2001 and the scheme went into winding up on 15 February 2002, heavily in deficit. The claimants applied for directions as to the application of the priority provisions of section 73 of the Pensions Act 1995 to the distribution of any assets. Representative defendants were chosen: the first defendant, a man, had been employed between 1992 and 2000 and was 64 when the winding up of the scheme commenced; and the second defendant, a woman, was 49 when the winding up commenced and had been employed between 1975 and 1988, and was, accordingly, a deferred member of the scheme, whose pension came within section 73(3)(f). The claimants sought a determination of the question, inter alia, whether someone in the first defendant's class had an entitlement that fell within section 73(3)(b), and so had priority of payment over someone in the second defendant's class. The judge answered the question in the affirmative, holding that the phrase "where a person's entitlement to payment of pension … has arisen" in section 73(3)(b) included the case where a person was entitled to call for immediate payment of his pension; that one of the primary functions of the normal retirement date was to act as a calculator for the accrual of pension, and an accrual in that sense was an entitlement to pension earned in a particular period of pensionable service; that it was possible for different normal retirement dates to apply to different periods of pensionable service, even though in the end there would only be one pension payable; and that, since under Community law from 17 May 1990 male members had the right to retire at 60 and that right could not be taken away, the entitlement to pension of male members who had the right to retire for that part of their service and who had attained the age of 60 at the date of the winding up fell within section 73(3)(b). The judge accordingly made a declaration that members of the pension scheme having the right to retire at age 60 in respect of any part of their service, and aged between 60 and 64 at the commencement of the winding up of the scheme, fell within section 73(3)(b).

The second defendant appealed.

The Court of Appeal held:
While the judge rightly recognised that there could be an entitlement to pension earned in a particular period to which one normal retirement date applied and an entitlement to pension earned in another period to which another normal retirement date applied, and section 73 of the Pensions Act 1995 itself recognised different tranches of pension to which different priorities applied, section 73(3)(b) was to be construed as limited to pension and other benefits in payment, or payment of which a member had a right to demand, but not as extending to benefits accrued outside the period between 17 May 1990 and the date when a scheme was amended to apply the same retirement age to male and female members, where the member had not yet reached the normal retirement date under the scheme's rules. On the facts, the first defendant was not truly representative, since his service was entirely within that period, and his normal date of retirement was accordingly to be treated as if it were 60, not 65, and he was over 60 at the date of commencement of the winding up, whereas those members who had the right to retire at 60 in respect of any part of their service, and who were aged between 60 and 64 on the date the scheme commenced winding up, would not fall within the provision in respect of pension or other benefits accrued by service to which a normal retirement date at the age of 65 applied. It followed that the declaration made by the judge had to be varied accordingly.

The appeal was allowed.

Appearances: Keith Rowley QC (Eversheds, Newcastle upon Tyne) for the second defendant; Nicolas Stallworthy QC (Nabarro) for the trustees; Paul Newman (Lee & Priestley, Leeds) for the first defendant.