On 11 August 2022 Mr Justice Leech handed down judgment in CMG Pension Trustees Ltd v CGI IT UK Ltd [2022] EWHC 2130 (Ch), a claim primarily concerning the construction of a rule in the CMG UK Pension Scheme which the defendant sponsoring employer contended provided for forfeiture of members’ benefits in specified circumstances.
The question arose following failed attempts to equalise members’ normal retirement dates with effect from 1 January 1996 and to reduce benefit accrual rates with effect from 1 April 1997, as a result of which substantial arrears of pension had fallen due (and, in certain cases, already been paid by the trustee).
Leech J held in favour of the employer’s proposed construction of the rule, holding that it was a forfeiture rule and took effect whenever a benefit or instalment, or any part of the same, had not been claimed for more than six years after it fell due, whether or not the beneficiary was missing or was aware that the benefit or instalment remained unpaid, in whole or part.
The parties agreed that affected members were deemed to have made a claim for their unpaid benefits on 1 October 2019. All arrears accruing prior to 1 October 2013 were therefore forfeit (representing a saving to the Scheme of some £2 million in additional liabilities).
The judge was also asked to determine whether the Pensions Ombudsman was a “competent court” for the purposes of section 91(6) of the Pensions Act 1995.
He answered this question in the negative, following Arnold J’s decision in Burgess v BIC UK Ltd [2018] EWHC 785 (Ch) in this respect, and held that insofar as arrears which are forfeit have already been paid and recovery is sought by way of equitable recoupment but the member disputes the amount in issue, the trustee will need to obtain a declaration from a court that the obligation to repay is enforceable.
The judgment offers important guidance, following Lloyds Banking Group Pensions Trustees Ltd v Lloyds Bank plc [2018] EWHC 2839 (Ch) and [2020] EWHC 3135 (Ch), and Re Axminster Carpets Group Retirement Benefits Plan [2021] EWHC 1652 (Ch), as to when a rule in a pension scheme will operate so as to forfeit members’ benefits. It is essential reading for all pensions practitioners and is likely also to be of interest to lawyers concerned with the construction of forfeiture provisions in other contexts and of written instruments more generally.
The judgment can be read in full, here.
Keith Rowley KC and Henry Day acted for the defendant employer, instructed by Gowling WLG (UK) LLP.
