See: Note
Lord Neuberger of Abbotsbury:
- This is an appeal from a decision of the Chancellor, which raises the issue as to the correct basis upon which the trustee of a company's staff pension scheme, which is being wound up, can seek the debt due from the company under section 75 of the Pensions Act 1995, to make good the deficiency in the scheme.
The relevant facts
- Headway PLC ("the Company") was a manufacturing company, whose business ceased in 1997, when the remaining workforce was made redundant. However, the Company continued to trade, albeit in the business of property investment. In 1989, the Company established a pension fund for the benefit of its employees, the Headway PLC Group Pension Fund ("the Scheme"), of which Eastearly Ltd ("the Trustee") was, and remains, sole trustee. The Scheme, which ultimately was formally constituted by a Deed ("the Deed") with annexed Rules ("the Rules"), dated 2 April 1993, provided for money purchase benefits, as well as final salary benefits, but it is only with the latter benefits that this appeal is concerned.
- The Trustee resolved to wind up the Scheme in May 2001. Although the Company has always been far from insolvent, the Scheme was and is in deficit. Where an occupational pension scheme is in deficit, the effect of section 75 of the Pensions Act 1995 ("the 1995 Act") is to create a debt ("the section 75 debt") from the employer to the scheme trustees equal to that deficit, as calculated in "the prescribed manner" to quote from section 75(5). It is common ground that, in this case, there is, or will be, such a debt (based on what is known as the minimum funding requirement - the "MFR") due to be recovered from the Company by the Trustee, and that the debt falls to be recovered before the winding up of the Scheme is completed.
- In 2002, as part of the winding up procedure, the Trustee entered into a contract (known as a preliminary buy-out contract - a "PBO contract") with an insurance company (Legal & General) whereby virtually all the assets of the Scheme are to be used to purchase annuities for the former members whose pensions had not come into payment on the date the winding up began. In the normal way, this PBO contract did not precisely quantify the amounts of such annuities, as the Trustee had to obtain further information, and anticipated recovering further assets, which would affect the precise amounts. Also in the normal way, the terms of the PBO contract provide, in accordance with the terms of the Scheme, that, if the assets in the Scheme are insufficient to pay annuities at the rates stipulated under the Scheme rules, then the amounts of the annuities will have to be scaled back appropriately.
- Conventionally, trustees who have entered into a PBO contract will assess and collect the section 75 debt, and then pay it over to the insurance company before completion of the PBO contract, thereby increasing the annuities payable to members. However, in this case, the Trustee has devised an arrangement ("the Arrangement") which is intended to increase the section 75 debt recoverable from the Company. What this would involve, in summary terms, is completing the PBO contract first, and only then seeking to quantify and recover the section 75 debt from the Company.
- The Arrangement can be seen as having three stages. The first stage would involve the completion of the PBO contract, and the members (or, technically, the former members) being issued with annuity contracts, purchased with the assets currently in the Scheme. The second stage would involve the quantification and recovery of the section 75 debt. The third stage would involve that sum being used to purchase further annuity contracts for the members. The consequential differences for members of the Arrangement over the conventional approach are, first, they will each have two annuity contracts rather than one, and, secondly, if (but only if) the Trustee succeeds in upholding the Chancellor's decision, the aggregate value of the two annuities will be greater than the value of the single annuity under the conventional approach.
- The nature and alleged effect of this proposed Arrangement is most easily appreciated by reference to an example given below by Mr Simmonds QC, who appears for the Trustee:
"A. Assume the Scheme has assets of £10m and liabilities calculated at (a) £20m on the full buy-out basis and (b) £15m on the prescribed section 75 basis.
B. If the Trustee adopts the conventional approach and collects the section 75 debt before buying out members' benefits, the Employer will be liable to pay the £5m section 75 shortfall and there will remain a £5m deficit on buyout.
C. If the Trustee adopts the partial buy-out route, it will apply the £10m assets in buying out half (i.e. 10/20) of the Scheme liabilities [- stage one]. The Trustee will then fix an "applicable time" for section 75 purposes. At that time the Scheme's liabilities on the prescribed section 75 basis will be £7.5m (i.e. 50% of £15m because half of the liabilities are bought out at stage one) and the assets will be nil. The section 75 debt is therefore £7.5m rather than £5m [- stage two]. The Trustee will collect this and will accordingly have an extra £2.5m available to meet the remaining buy-out cost of £10m [- stage three].
D. The difference in outcome is accounted for by the fact that, under the partial buy-out route, the liabilities discharged at stage one are effectively valued on the buy-out basis rather than on the prescribed section 75 basis."
- The Trustee's analysis of the discharge of benefits by the purchase of annuity policies has been referred to as the "benefit for benefit" approach, in contrast with the analysis of the Company, which has been called the "value for value" approach. In Mr Simmonds's example, therefore, the value for value approach treats the buy-out at stage one as satisfying two-thirds (i.e. 10/15) of the Scheme liabilities valued in accordance with section 75, so that the section 75 debt is £5m, as it would be under the conventional approach.
The issues between the parties in summary
- The two main issues raised on this appeal arise out of this proposed Arrangement, and they are as follows:
(1) If the Arrangement was entered into, would it in fact result in the section 75 debt being increased over what it would otherwise be under the conventional approach?
(2) Can the Trustee lawfully enter into the Arrangement, in view of the statutory obligations relating to guaranteed minimum pensions, and if this is not possible in relation to all Scheme members, can the Trustee enter into a "truncated" version of the Arrangement, and if so, how?
The second issue logically precedes the first, but both parties have argued the appeal, and indeed the case at first instance, in this order, and I shall adhere to that approach.
- Issue (1) arises from two features of the statutory system which apply to pension schemes put into winding up before 6 April 2005. The first feature is that, in the light of the terms of section 75(3) of the 1995 Act (set out below), it is common ground that the Trustee has the power to determine the time as at which the MFR, and hence the section 75 debt, is to be calculated. The second feature is that section 75(5) of the 1995 Act (also set out below) required the MFR to be quantified by reference to assumed yields on government securities and equities substantially in excess of what is actually available in the market - see the Occupational Pension Schemes (Deficiency on Winding up etc) Regulations 1996, SI 1996/3128 ("the 1996 Regulations"), which incorporate provisions of the Occupational Pension Schemes (Minimum Funding Requirement and Actuarial Valuations) Regulations 1996, SI 1996/1536, which in turn incorporate and give legal effect to the Faculty and Institute of Actuaries Actuarial Guidance Note 27.
- Issue (2) arises from the fact that there are insufficient funds in the Scheme to purchase annuities which are large enough to buy out certain minimum pensions which are required by section 9 and following of the Pension Schemes Act 1993 ("the 1993 Act") and the Occupational Pension Schemes (Contracting-Out) Regulations 1996, SI 1996/1172, as amended. The fact that it will be impossible to meet these guaranteed minimum pensions ("GMPs") by using all the assets in the Scheme prior to seeking the section 75 debt is said by the Company to prevent the Arrangement being implemented by the Trustee.
- The two issues are not easy to resolve, as is illustrated by the way in which both the focus of the dispute and the nature of the arguments have changed since the Arrangement was first mooted. The points made in the skeleton arguments ahead of the hearing of this appeal were somewhat different from those before the Chancellor, and those points were not merely developed, but changed, in oral argument on the first day of the hearing. The focus of the arguments had changed yet again by the second day of the hearing, which was needed, as Stanley Burnton LJ said on the first day, once it was suggested on behalf of the Trustee that at least one aspect of the Occupational Pension Schemes (Discharge of Liability) Regulations 1997, SI 1997/784 ("the 1997 Regulations") was ultra vires.
- My reference to the shifting sands of the argument implies no criticism of the very experienced counsel appearing for the Trustee and the Company: it merely reflects the legal intricacies and complexities raised in these proceedings. The difficulties are attributable in part to the diffuse and inartistic draftmanship of the Scheme, which appears to have been cobbled together, and, perhaps even more, to the almost impenetrable primary and secondary legislation applicable to pensions, which was accurately referred to by Mr Nugee QC for the Secretary of State as "fiercely technical". In order not to lose one's bearings, it is worth beginning by very briefly summarising each party's arguments, as they were ultimately formulated.
- On issue (1), Mr Simmonds QC, for the Trustee, relies on rule 12(j) of the Rules ("rule 12(j)"), which, he contends, provides that, subject to certain exceptions which are not in point here, where the Trustee applies money out of the Scheme to purchase an annuity in respect of part of the pension due to a member, it has the effect of a benefit for benefit discharge. The Company contends, first, that rule 12(j) envisages a value for value discharge, but that, even if that is wrong, the effect of proviso F to clause 21(b) of the Deed ("clause 21(b)") is that, where the buy out is implemented in an insolvent situation, such as the present, a value for value discharge applies. While accepting that proviso F to clause 21(b) appears to provide that, where the annuity is purchased in the context of an insolvent winding up, there is a scaling down so that the discharge becomes, in effect, value for value, the Trustee contends that section 75(6) of the 1995 Act effectively overrides the effect of proviso F to clause 21(b).
- The Trustee has a second argument on issue (1), to the effect that, quite apart from the terms of the Scheme, there is a free-standing right to buy out pension rights on a benefit for benefit basis in sections 19 and 81 of the 1993 Act (which are concerned with GMPs and short service benefit respectively). I shall deal with that argument when I discuss issue (2).
- Turning to issue (2), the Company's argument is that, because some members of the Scheme (referred to as "high GMP members") are entitled to GMPs which will not be met in whole by the policies purchased pursuant to the completion of the PBO contract at stage one of the Arrangement, it would not be open to the Trustee to proceed with the Arrangement, as the Trustee cannot lawfully buy out GMPs only in part, either under the terms of the 1993 Act or under the terms of the Scheme.
- The Trustee's primary position so far as the 1993 Act is concerned is that section 19 of that Act, as implemented through the 1997 Regulations does permit a partial buy out of GMPs, and if, which is contested, the 1997 Regulations purport to provide otherwise they are ultra vires. As to the rules of the Scheme, the Trustee initially accepted that the rules of the Scheme precluded a partial buy out of GMPs, but contended, as it still does, that section 19 of the 1993 Act confers on the Trustee a power outside the terms of the Scheme – a "freestanding power" – to buy out GMPs on a benefit for benefit basis. However, the Trustee now contends that, properly construed, the rules of the Scheme do not preclude a partial buy out of the GMPs. If these arguments fail, the Trustee says that it can nonetheless pursue the Arrangement either by obtaining the consent of all the high GMP members or by entering into a truncated version of the Arrangement, which would involve the Arrangement only being implemented in relation to members of the Scheme who are not high GMP members (i.e. "low GMP members") or who are high GMP members who consent to the Arrangement.
Issue (1): Can the Trustee effect a buy-out on a benefit-for-benefit basis?
Rule 12(j) of the Scheme Rules
- The lynch-pin of the Trustee's case on this issue is rule 12(j). Rule 12 is concerned with termination of pensionable service. Rule 12(j) is headed "Purchase of Qualified Policies", and states:
"Despite anything to the contrary expressed or implied in this Rule or elsewhere in the Trust Deed and Rules, at the date a Member's Pensionable Service terminates, or at any time after that date, the Trustees may apply out of the Fund an amount not exceeding the value (as determined by the Actuary) of the benefits which the Member, or any Beneficiary, Personal Representative or Dependant of the Member has a prospective entitlement to under the Plan, in the purchase of one or more Qualified Policies providing benefits for one or more of such persons, in lieu of the benefits (or any part of them) which would otherwise be payable under the Rules, and under which policy (or policies) pensions are non-commutable and non-assignable except to such extent as may be permitted in accordance with the Rules and as the Trustees think fit."
- Rule 12(j) is subject to no less than seventeen provisos, of which the following are relevant for present purposes:
"PROVIDED THAT:-
B. the purchase (by the Trustees) of one or more Qualified Policies, where the Member is not exercising his right [to a cash equivalent]...., shall be made only if they have been approved by the Inland Revenue and if:-
….
(b) except as provided for in D(ii) below, they are purchased at the written request of the Member or his widow (or her widower), or with his or the widow's (or widower's) written consent in such a form as is prescribed from time to time by statute or statutory regulations and thereupon the Trustees shall be discharged from their liability to provide benefits for (and in respect of) the Member under the Plan to the extent that an amount equivalent in value to the value of such benefits has been applied by the Trustees in the purchase of the policy (or policies);
…..
D. where Proviso A [purchase at the request of the member] to this Rule 12(j) does not apply, the Trustees may secure benefits by a Qualified Policy if they so decide, and in so doing, be discharged from their liability in respect of the benefit so provided in circumstances where
(i)...
(ii) it is made without the consent of the Member..."
- The simple point made on behalf of the Trustee is that proviso D of rule 12(j) would apply to the annuity contracts purchased pursuant to the PBO contract at stage one, and that the provision that the Trustee shall "be discharged from their liability in respect of the benefit so provided" clearly indicates that the discharge would be benefit for benefit. So, if a member would be entitled to a pension of £15,000 a year and the whole of his (notional) share of the assets in the Scheme is used to purchase a policy which would give him a pension of £10,000 a year, where proviso D applies, the purchase of the policy would not discharge the whole of the Trustee's liability, but only two-thirds of that liability.
- Subject to any persuasive points to the contrary, that argument seems to me to be right as a matter of ordinary language, and it appears to receive some support from two other passages in rule 12(j). First, there is the reference to "providing benefits … in lieu of the benefits (or any part of them) which would otherwise be payable under the Rules" in the opening part of the rule. Secondly, there is the contrast between the words relied on in proviso D to rule 12(j) and the provision that the Trustee shall "be discharged from their liability to provide benefits for (and in respect of) the Member under the Plan to the extent that an amount equivalent in value to the value of such benefits has been applied by the Trustees" in proviso B to the same rule. This suggests that, where proviso B applies, the discharge would be on a value for value basis – so that in the example in the preceding paragraph, the Trustee would be wholly discharged, if proviso B applies.
- The points raised in answer to this by Mr Furness QC, for the Company, do not persuade me to the contrary. He suggests that one would expect rule 12(j) to provide for a value for value discharge, as otherwise members for whom Qualified Policies were obtained would, unless the Scheme was fully funded, be effectively better off than members for whom such policies were not obtained. The answer to that is that it would always be a matter for the Trustee whether to effect a buy-out to which proviso D applied, and therefore members are appropriately protected. Further, it can equally forcefully be said that, given that proviso D primarily applies where the buy-out is being effected without the consent of the member, it would be wrong that it should be on a value for value basis, unlike where the buy-out was under proviso B, where it had been requested or agreed to by the member.
- In any event, what one would expect a provision in a deed or contract to provide is not a particularly helpful aid to interpretation, unless, of course, it is another way of relying on commercial common sense. On that aspect, it appears to me that, to put it at its lowest from the point of view of the Trustee, either interpretation accords with commercial sense, and I proceed on that basis, although, if anything, I find the conclusion contended for by the Trustee more attractive. When it comes to the actual language of proviso D to rule 12(j), Mr Furness realistically conceded that the Trustee's contention that it had a benefit for benefit effect was possible, but suggested that it could be given another meaning, on the basis that the expression "the benefit so provided" refers to the benefit under the Scheme provided by the policy purchased. I agree with Mr Simmonds's contention that this is a strained and unnatural meaning to accord to the expression.
- The Company also argued, at least at one time, that the provisions of proviso B also applied to proviso D. That cannot be right, both because each proviso appears pretty clearly to apply in different circumstances, and because each proviso has its own discharge provision.
- The Company also says that, if proviso D has the meaning contended for, the Trustee could never get a discharge in respect of the balance of the pension due but not bought out (the £5000 a year in the example given in paragraph 20 above) – except a statutory discharge under section 74 of the 1995 Act which was not in force when the Deed was executed. The answer to that contention seems to me to lie in proviso F to clause 21 of the Deed, to which I now turn.
Clause 21 and sections 73 and 75 of the 1995 Act
- Clause 21(b) states how the assets of the Scheme are to be applied on the determination of the Scheme, and it sets out a series of priorities in paragraphs (i) to (viii), which in very broad terms can be summarised as (i) to (iii) pensions in payment, (iv) to (vi) GMPs and other contracted out benefits, and (vii) and (viii) benefits in excess of contracted out benefits. Those priorities are subject to a number of provisos, including the following:
"PROVIDED THAT …
E. any benefits payable in accordance with this Clause 21(b) may, subject to Clause 21(e), be secured by purchasing Qualified Polices in accordance with Rule 12(j) and, in the case of any such Members as are referred to in the SECOND application above, may be on such terms (consistent with approval under the Act) as to the payment of any benefit on the death of any Member in respect of whom the policy is issued, as the Trustees shall (in their absolute discretion) think fit to arrange, but not so that the value of the pension and of any benefit so secured shall together be in excess of the value of the Member's interest in the fund as mentioned above;
AND PROVIDED FURTHER THAT in respect of each Member, the pensions to be secured under paragraphs (vii) and (viii) shall be calculated:-
F. having regard to the value, as determined by the Actuary, of the interests in the Fund (or Part A as appropriate) of the Member and his Dependants, reduced by the value of any benefits secured in respect of the Member under paragraphs (iv) and (v) of this Clause 21(b) or deemed to be secured under Rule 16(f) if an Accrued Rights Premium has been (or will be) paid in respect of the Member. …."
Clause 21(c) provides that any surplus may be applied by the Trustee to augment benefits and, in so far as not so applied, should be paid to the Company, and clause 21(d) is in these terms:
"The provisions of Rule 12(j) shall apply in relation to any benefit to be secured in accordance with this Clause."
- Although rule 12(j) is referred to on two occasions in the passages just quoted from clause 21, it seems plain that, subject to the Trustee's reliance on sections 73 to 75 of the 1995 Act, proviso F to clause 21(b) is intended to apply in a case such as this, namely when the Scheme is being wound up and there are insufficient assets to meet the totality of its liabilities to members. Equally, it seems plain that the effect of this proviso, with its reference to "the value of the interests in the Fund" being "reduced by the value of any benefits secured" would be to change, the benefit for benefit effect of a rule 12(j) buy out, even if effected in circumstances where proviso D to that rule would apply, to a value for value effect.
- However, the Trustee argues that, at least for the purpose of assessing the MFR, and therefore the section 75 debt (which is, of course, the ultimate exercise in which the parties in these proceedings are engaged), proviso F to clause 21(b) must be disapplied, so that one is back with the benefit for benefit effect of proviso D to rule 12(j). Ultimately, this argument turns on section 75(6), but, it is helpful to place that provision in its statutory context, which involves referring to section 73, as well as section 75, of the 1995 Act. (Section 74 is concerned with "Discharge of liabilities by insurance etc", and is not in point.)
- Section 73(1) of the 1995 Act states:
"(1) This section applies, where a [scheme such as the Scheme in this case] is being wound up, to determine the order in which the assets of the scheme are to be applied towards satisfying the liabilities in respect of pensions and other benefits (including increases in pensions)."
Section 73(3) sets out the order of priority which is in these terms, so far as relevant:
"(a) any liability for pensions or other benefits which, in the opinion of the trustees, are derived from the payment by any member of the scheme of voluntary contributions; …
(b) … where a person's entitlement to payment of pension or other benefit has arisen, liability for that pension or benefit….;
(c) any liability … for … guaranteed minimum pensions … (but excluding increases in pensions), …
(d) any liability for increases to pensions referred to in paragraph … (b);
(e) any liability for increases to pensions referred to in paragraph (c);
(f) so far as not included in paragraphs (c) or (e), any liability for pensions or other benefits which have accrued to or in respect of members of the scheme (including increases to pensions)… ."
The effect of section 73(2) is that the assets of a scheme must be applied to satisfy in full the liabilities described in one category in subsection (3) before being applied to the following category, and if there are some, but insufficient, assets to satisfy the liabilities in a category, all those liabilities must be scaled down equally.
- At least on the face of it, section 73 is only concerned with imposing a statutory scale of priorities, which displaces any scale of priorities stipulated in any scheme to which it applies (such as is contained in paragraphs (i) to (viii) of clause 21(b) in the present case). Section 73 does not seem to be concerned with the assessment or quantification of the sums or pensions due pursuant to the terms of any such scheme. Such a view is underlined by the reference to the purpose of the section in subsection (1): it is "to determine the order in which the assets of the scheme are to be applied".
- However, it is when one turns to section 75, which is headed "Deficiencies in the assets", that the strength of the Trustee's case becomes apparent. So far as relevant, that section is in these terms:
"(1) If, in the case of an occupational pension scheme …., the value at the applicable time of the assets of the scheme is less than the amount at that time of the liabilities of the scheme, an amount equal to the difference shall be treated as a debt due from the employer to the trustees or managers of the scheme.
….
(3) In this section "the applicable time" means -
(a) if the scheme is being wound up before a relevant insolvency event occurs in relation to the employer, any time when it is being wound up before such an event occurs
…..
(5) For the purposes of subsection (1), the liabilities and assets to be taken into account, and their amount or value, must be determined, calculated and verified by a prescribed person and in the prescribed manner.
(6) In calculating the value of any liabilities for those purposes, a provision of the scheme which limits the amounts of the liabilities by reference to the amount of its assets is to be disregarded.
…. ."
- (It can thus be seen why, in this case, it is common ground that the Trustee can select the date as at which the section 75 debt is to be calculated: subsection (3)(a) applies, as there has been no "insolvency event", as the insolvency referred to, as explained, in subsection (4) would be that of the Company, which is solvent. Further, as already explained, the "prescribed manner" in section 75(5) is contained in the 1996 Regulations.)
- The simple point made on behalf of the Trustee is that section 75(6) effectively requires one to disapply proviso F to clause 21(b), at least for the purpose of assessing the MFR and hence the section 75 debt. As Stanley Burnton LJ said in argument, one would expect to find a provision such as subsection (6) in section 75, as otherwise an employer could include a provision in a pension scheme which effectively ensured that there was never a liability for a section 75 debt, or that at least any such liability was severely attenuated.
- In my judgment, this point made by the Trustee is a good one. It accords section 75(6) of the 1995 Act its natural meaning, and it complies with commercial common sense. The purpose of section 75 is to require an employer who has an underfunded scheme to make good the deficit, either at a time when the scheme is being wound up, or at a time when the employer is insolvent. It would seriously undermine the purpose of the section if it was open to an employer in such circumstances to rely on a provision such as proviso F to clause 21(b) to scale down the rights of members, and therefore to reduce the section 75 debt for which the employer was liable, for the very reason that the scheme was underfunded.
Concluding remarks on issue (1)
- Accordingly, in agreement with the Chancellor, I consider that, subject at least to issue (2), the Arrangement would achieve the end that it has been designed to achieve. Proviso D to rule 12(j) ensures that the completion of the PBO, and the issue of the first set of annuity contracts at stage one of the Arrangement would discharge the Scheme's liabilities to members only to the extent of the benefit provided by those contracts. In other words, under that proviso, referring back to the example in paragraph 20 above, an annuity of £10,000 a year for a member entitled to a Scheme pension of £15,000 a year would discharge the Trustee to the extent of £10,000 a year, leaving it with a balance of liability of £5,000 a year, even if the whole of that member's notional share of the Scheme assets was used to purchase the annuity.
- It is true that, if one confines oneself to the terms of the Scheme, the provisions of Proviso F to clause 21(b) would then scale down the benefits to which such a member was entitled, but those provisions cannot be invoked by the Company in the light of the clear terms of section 75(6) of the 1995 Act.
- During argument, Aikens LJ suggested that the correct approach was to start with clause 21(b), then go to rule 12(j), and then consider the effect of section 75(6) of the 1995 Act, rather than taking the course I have adopted, namely starting with rule 12(j) and only then going to clause 21(b) and section 75(6). While I believe that the approach I have adopted is simpler to explain and understand, it is only right to say that, given that the Scheme is being wound up, I consider that Aikens LJ's approach is probably the right one. However, unsurprisingly, it would arrive at precisely the same conclusion as the approach I have adopted, and for the same reasons. One would start by reducing the value of a member's pension rights because of proviso F to clause 21(b); one would then conclude that stage one of the Arrangement would serve to discharge the Trustee's liability to the member to the extent of the benefit obtained under the annuity contract purchased pursuant to the completed PBO, leaving the Scheme's liability to the member as reduced both by proviso F to clause 21(b) and by the benefit obtained from the annuity; however, in order then to assess the MFR, and hence the section 75 debt, because of the requirement of section 75(6), one would then have to reverse the reduction made to that liability pursuant to proviso F to clause 21(b).
Issue (2): Is the Arrangement precluded by the need to provide GMPs in full?
Introductory: GMPs and short service benefit
- It is necessary to start with a very brief explanation of the background to GMPs. State pensions consist of (a) a basic state pension, introduced in 1946, and (b) an additional state pension related to earnings introduced in 1978 as SERPS, replaced in 2002 by the State Second Pension, or S2P. An employee who is a member of an occupational pension scheme can contract out of the additional state pension (which results in lower national insurance contributions from employee and employer), but only if the scheme provides him with a minimum level of benefits. Such contracting out is governed by Part III (sections 7 to 68A) of the 1993 Act.
- There are various ways in which a scheme can validly enable an employee to contract out; the Scheme in the present case invoked the so-called GMP basis under section 9(2)(a) of the 1993 Act, which meant that it had to comply with sections 13 to 24E of that Act. Section 13(1) states that, "[s]ubject to the provisions of this Part", the scheme must (a) "provide for the earner [i.e. the relevant employee and member] to be entitled to a pension under the scheme if he attains pensionable age", that is 65 for a man and 60 for a woman, and (b) contain a rule that the weekly rate of the pension will be not less than his guaranteed minimum (if any) under sections 14 to 16" – i.e. it must be a GMP. It is, fortunately, unnecessary for present purposes to consider the details of those three sections, which are prescriptive and detailed. Section 14 contains the fundamental requirement, section 15 requires the pension to be increased if commencement is postponed, and section 16 is concerned with revaluation for "early leavers", i.e. those whose relevant employment ceases before "the last tax year in [their] working life". By virtue of section 17 of the 1993 Act, the scheme must also provide the earner's widow, widower or civil partner ("survivor") with his or her own GMP, which must be at least half the earner's GMP. Sections 109 to 110 of the 1993 Act also require annual increases to be provided in the pension, based on RPI (albeit subject to a maximum of 3% per annum).
- These requirements for a GMP do not track the SERPS provisions precisely, and therefore there is provision for the earner to remain entitled to any shortfall, which is assessed by deducting the GMP from the SERPS benefit – see section 46(1) of the 1993 Act.
- It is also convenient at this stage to mention that the 1993 Act also provides, in Part IV, "Protection for Early Leavers". Section 71(1) contains the "basic principle", which is that, where an early leaver "has at least 2 years' qualifying service" or a "transfer payment in respect of his rights has been made to the scheme", he and his survivor are to be "entitled to [the] benefit … which would have been payable under the scheme as long service benefit, … calculated in accordance with this Chapter." That benefit is defined in section 71(2) as "short service benefit". The remaining sections of Part IV of the 1993 Act are concerned with regulating short service benefit.
Sections 19 and 81 of the 1993 Act and regulation 5 of the 1997 Regulations
- Section 19 of the 1993 Act is entitled "Discharge of liability where guaranteed minimum pensions secured by insurance policies or annuity contracts". As Mr Nugee says, it is one of the "provisions of this Part" to which the requirements of section 13 are "subject". So far as relevant , section 19(1) is in these terms:
"A transaction to which this section applies discharges the trustees … of a … scheme from their liability to provide for or in respect of any person guaranteed minimum pensions –
(a) if it is carried out not earlier than the time when the person's pensionable service terminates; and
(b) if and to the extent that it results in guaranteed minimum pensions for or in respect of that person being appropriately secured; and
(c) if and to the extent that the requirements set out in paragraph (a), (b) or (c) of subsection (5) are satisfied".
Section 19(2) provides that the section applies to the taking out of "a policy of insurance or a number of such policies" or "an annuity contract or a number of such contracts". Section 19(3) states that, in order for the GMP to be "appropriately secured" a policy or contract must be "appropriate". This means that the policy or contract must satisfy the requirements of section 19(4), which, in paragraph (d) says that the policy or contract must "satisf[y] such requirements as may be prescribed".
- Section 81 of the 1993 Act provides that a "transaction to which section 19 applies discharges the trustees … from their liability to provide for or in respect of any person short service benefit" provided certain requirements are satisfied. Thus, in relation to buying out short service benefit, section 81 effectively mirrors what section 19 provides for buying out GMPs.
- The requirements prescribed for the purposes of section 19(4)(d) of the 1993 Act are set out in regulation 5 of the 1997 Regulations, paragraph (1) of which stipulates:
"(a) that the insurance company with which the policy is taken out … assumes an obligation … to pay the benefits secured by the policy…;
(b)….
(c) that, if any guaranteed minimum pension is due or prospectively due to the earner in question, the policy … contains, or is endorsed with, terms so as to provide
(i) that the annuity to be paid thereunder to or for his benefit will be at least equal to the guaranteed minimum pension due to him, or, as the case may be, prospectively due to him, at pensionable age subject to section[s] 15 … [and] 16 ….of the 1993 Act;
(ii) in the case where the earner dies leaving a [survivor], that the annuity payable for the [survivor's] benefit will be at least equal to the guaranteed minimum pension due or prospectively due to the [survivor];
(iii) in each case … any increase in guaranteed minimum pension under [sections 109 and 110] of the 1993 Act results in similar increases in the annuity."
Does regulation 5 purport to preclude GMPs being partially bought out?
- The Company contends that regulation 5(1)(c)(i) and (ii) of the 1997 Regulations, with its clear requirement that the policy or contract "contains or is endorsed with" a provision stating that the annuity "will be at least equal to the [GMP] due to him [or the survivor]" means that a partial buy out of GMPs is excluded, as a policy or contract which effects a partial buy out could not satisfy that requirement. The Secretary of State, supported by the Trustee, contends that, once one appreciates the legislative context, paragraphs (i) and (ii) of regulation 5(1)(c) do not have such a limiting function. There was no discussion as to what the precise function of those paragraphs was on this basis, but it may well be to provide a denominator against which the "extent" referred to in section 19(1)(b) of the 1993 Act is measured.
- As a matter of acontextual interpretation (if such an exercise is possible), that argument has obvious force. However, I have been persuaded by Mr Nugee that it is not correct. While I readily accept that it does not accord with one's initial impression of the words of regulation 5(1)(c)(i) and (ii) of the 1997 Regulations, if read on their own, I have concluded that, when properly interpreted, they do not preclude a partial buy out of a GMP. It seems to me that the words "to the extent that" in section 19(1)(b) of the 1993 Act can properly be treated as governing what follows, and in particular what is in section 19(4)(d), and that those words can also be read through into regulation 5, and in particular 5(1)(c)(i) and (ii), of the 1997 Regulations.
- It appears clear that section 19 of the 1993 Act envisages that GMPs can be bought out either in part or in full. That is because of the words "and to the extent that" in subsection (1)(b). Mr Furness suggests that those words could have been included either to cover a case where the policy or contract purchased provides more than the GMP would have provided, or to cover a case where an earner has more than one GMP. I do not think that either suggestion can be right. Whether a policy or contract provides the same pension as, or a greater pension than, the GMP can be of no consequence: in either case it should discharge the trustees' liability in full. The reference to "pensions" in section 19(1) is not to more than one pension for a particular earner, but to the two pensions which are dealt with in regulation 5(1)(c)(i) and 5(1)(c)(ii) of the 1997 Regulations. An earner may have more than one GMP, but it is most unlikely that section 19(1) was drafted to deal with such cases: not only would they have been rare, but it would not have been necessary or indeed appropriate to deal with them in such an oblique way.
- The conclusion that section 19 envisages GMPs being bought out in part as well as in whole is strongly reinforced by section 47(3) of the 1993 Act, which refers to GMPs being wholly or partly secured under section 19(3) of that Act. I am unpersuaded by Mr Furness's argument that this provision was included to deal solely with the fact that partial buy out of GMPs was permitted under the predecessor 1989 legislation: the reference is to section 19 of the 1993 Act, not any earlier legislation. Indeed, the very fact that partial buy out of GMPs was permitted under the legislation in force immediately before the passing of the 1989 Act is another factor supporting my conclusion. There is no suggestion that the 1989 Act was meant to be more restrictive than the previous law on this issue.
- This conclusion is reinforced by the reference in section 19(2)(a) and (b) to the possibility of there being more than one policy or annuity contract, a point picked up in section 19(3). The intention of section 19 is clearly that a GMP can be bought out through the medium of more than one policy or annuity contract, but, at least on the Company's construction of regulation 5(1)(c)(i) and (ii) of the 1997 Regulations, that would not be possible as none of the policies or contracts could be said to provide an annuity which "will be at least equal to the [GMP]".
- All this suggests that regulation 5(1)(c)(i) and (ii) of the 1997 Regulations should not preclude buying out of GMPs in part. Indeed, it goes further than that, in that I would accept the argument advanced by Mr Nugee, that, if regulation 5(1)(c)(i) and (ii) have the meaning for which the Company contends, the Regulations would be defective, in that they would exclude that which the legislature has specifically provided in the 1993 Act that they should include. Mr Furness argues that this is not so for two reasons. First, he says that section 19 of the 1993 Act plainly envisages that any regulations made thereunder will be prescriptive, and will cut down the otherwise much broader effect of the section. I accept that, but that does not mean that it could have been intended that a course which was specifically permitted by the section could be wholly forbidden by the regulations. Mr Furness's second argument relies on section 182(2)(a) of the 1993 Act, which permits the Secretary of State, when making any regulations pursuant to any provision of the Act "to make … [such] regulations … either in relation to all cases to which the power extends or any less provision (whether by way of exception or otherwise)". That may prevent the 1997 Regulations being unenforceable (as Mr Simmonds contends they would be) if the Company's construction of regulation 5(1)(c)(i) and (ii) is correct, but it would remain the case that either the Regulations would be defective, in the sense of incomplete, in that they do not cater for a partial buy out, or the Secretary of State would have failed to implement section 19 by not issuing regulations dealing with the terms on which partial buy outs of GMPs would be permitted.
- Indeed, if the Company's case as to the meaning of regulation 5(1)(c)(i) and (ii) is correct, there would be another problem, which arises from the fact that the 1997 Regulations apply to enable trustees of a pension scheme to obtain a discharge where the scheme is in winding up and there are insufficient assets to buy out GMPs in full – see section 74(2), (3) and (4) of the 1995 Act, which take one to regulation 8(3), (4) and (5) of the 1996 Regulations, which in turn leads to section 95(2)(c) of the 1993 Act, which takes one to regulation 12(2)(a) of the Occupational Pension Schemes (Transfer Values) Regulations 1996, SI 1996/1847, which then refers one back to the 1997 Regulations. If regulation 5(1)(c)(i) and (ii) had the meaning for which the Company contends, there would be an absurdity: it would mean that the very provision which is plainly intended to enable trustees to be discharged when there are insufficient funds to buy out a GMP in full could only be relied on if the GMP is bought out in full. In this connection, it is worth mentioning that all the Regulations of 1996 and 1997 to which I have referred can be read together, and indeed may well be a legitimate aid to appreciating the thinking behind the 1995 Act, as those Regulations (together with others) were all drafted to come into effect on the date that the 1995 Act came into force, 6 April 1997.
- Policy considerations, as explained on behalf of the Secretary of State, also suggest that regulation 5(1)(c)(i) and (ii) of the 1997 Regulations should, if possible, be read so as not to exclude partial buy outs of GMPs. There is no reason why trustees of a pension scheme should be precluded from buying out a GMP only in part. The sole concern of the legislature and executive is that, where there has been a contracting out, so that a right to a GMP has substantially replaced the right to an additional state pension (SERPS), the right to receive the GMP in full is enforceable in law and in practice. It matters not whether the right is enforceable against a single person for the whole of the GMP, or against one person for part of the GMP, and another person for the balance.
Does section 19 of the 1993 Act give a freestanding right to buy out GMPs in part?
- Having established that section 19 of the 1993 Act does not in fact preclude the buying out of GMPs in part, the Trustee goes further, and contends that, quite apart from the terms of the Scheme, that section provides it with an independent right to buy out GMPs in part or in full. This argument also applies to section 81 of the 1993 Act, and therefore is the basis for the Trustee's alternative argument on issue (1) referred to in paragraph 15 above. Although I accept that sections 19 and 81 of the 1993 Act envisage that any policy purchased for a member by the trustees of a scheme will result in a benefit for benefit discharge, I do not consider that either section gives rise to independent or freestanding rights for trustees.
- In order to succeed in its argument to the contrary, the Trustee has to show that the three requirements in paragraphs (a) to (c) of section 19(1) can be satisfied without having to rely on the provisions of the Scheme. Section 19(1)(c) requires paragraph (a), (b) or (c) of section 19(5) to be satisfied, and it is common ground that if (as is the Trustee's preference) the Arrangement is effected without member consent only section 19(5)(c) could be in point. Section 19(5)(c) requires regulation 6(3) of the 1997 Regulations to be satisfied, and that regulation provides that:
"The requirements of this paragraph are satisfied if the benefit is provided as an alternative to short service benefit by virtue of a provision that conforms with the requirements of regulation 9(4) of the Occupational Pension Schemes (Preservation of Benefit) Regulations 1991… ".
- In order to establish that there is a freestanding right under section 19 of the 1993 Act, the Trustee argues that the reference to "provision" in that paragraph is not, as it seems to me that it is, to a provision of the scheme in question, but to the provision of the benefit which is stated to be "provided". This is an ingenious argument, but it is a thoroughly unnatural reading of regulation 6(3) of the 1997 Regulations. No argument has been raised as to why such an unnatural construction should be adopted, and I would therefore reject it.
- It is right to add that this conclusion that sections 19 and 81 of the 1993 Act do not give a free standing right as the Trustee contends is supported by the wording of regulation 9(1) of the Preservation of Benefit Regulations, SI 1991/167, which states that a "scheme may provide for benefits different from those required to constitute short service benefit to be appropriately secured by a transaction to which section 19 of the [1993] Act applies…". Similarly, regulation 9(4) of those Regulations starts by stating that a "scheme may allow the alternative described in this regulation …".
Can GMPs be bought out in part under the provisions of the Scheme?
- The effect of this analysis of section 19 of the 1993 Act is that, as the Trustee contends, it does not prevent trustees of a pension scheme from effecting a partial buy out of GMPs, but, as the Company contends, it does not bestow on such trustees a free-standing right to do so outside the terms of the scheme in question. It is therefore necessary to address the question whether the terms of the Scheme preclude the trustee from effecting a partial buy out of GMPs, as the Company contends.
- The provisions which the Company relies on to establish that any buy-out effected pursuant to rule 12(j) cannot involve a partial buy out of GMPs are paragraph (iv) of proviso C, and the incorporation of rule 16(b) into provisos E and F to rule 12(j).
- Proviso C to rule 12(j) includes, in sub-paragraphs (a) and (b) of paragraph (iv) provisions which are strikingly similar, not only in their intended effect, but also in their language, to paragraphs (i) and (ii), respectively, of regulation 5(1)(c) of the 1997 Regulations. Further investigation reveals that paragraphs (i), (ii), (iii) and (iv) of proviso C to rule 12(j) reflect almost word for word, and were quite plainly taken, with only a little linguistic adaptation, from, respectively, regulations 2, 3, 4(a) and 4(b) of the Occupational Pension Schemes (Discharge of Liability) Regulations 1985, SI 1985/1929, in the form in which they were promulgated on 2 April 1993, when the Scheme was created. These regulations ("the 1985 Regulations") were effectively the predecessor to the 1997 Regulations, which replaced them.
- There can be no real doubt, in my view, that the drafter of the Scheme was intending proviso C to rule 12(j) to reflect precisely the requirements of the 1985 Regulations, and, in particular, that paragraph (iv) of the proviso was to reflect regulation 4(b) of the 1985 Regulations. In those circumstances, it would, I think, be plainly right to conclude that, if regulation 4(b) of the 1985 Regulations would not have precluded a partial buy out of GMPs then neither does paragraph (iv) of proviso C.
- I consider that regulation 4(b) of the 1985 Regulations would not have precluded such a partial buy out. My reasons are essentially the same as those already given for holding that regulation 5(1)(c)(i) and (ii) of the 1997 Regulations does not preclude a partial buy out of GMPs. Without burdening this lengthy and detailed judgment with further details of pension scheme legislation which is no longer in force, the wording of regulation 4(b)(i) and (ii) of the 1985 regulations and regulation 5(1)(c)(i) and (ii) of the 1997 Regulations is very similar indeed, and the relevant parts of their respective primary statutory bases, section 52C of the Social Security Pensions Act 1975 and section 19 (and section 81) of the 1993 Act are also very similar.
- I turn, then, to provisos E and F to rule 12(j). Both provisos apply to short service benefit. Proviso E requires any "Qualified Policy", i.e. a policy purchased to buy out a member's rights pursuant to rule 12(j), "in the case of … a member who is a contracted-out member and insofar as short service benefit includes benefits accrued during contracted-out employment", to "guarantee to provide benefits at a minimum level not less than those prescribed under Rule 16(b)". Proviso F to rule 12(j) is to much the same effect. Rule 16(b) is concerned with GMPs, and it basically provides that where a member has a right to a GMP because he or she has contracted out of SERPS, then such member, and his survivor, should be entitled under the Scheme to a pension at least equal to the GMP.
- It is very hard to discern any answer to the simple argument that the requirement in proviso E, that any policy purchased under rule 12(j) must "guarantee to provide benefits at a minimum level" as prescribed by rule 16(b), means that the Trustee is not able to purchase a policy which provides benefits which are less than those to which members are entitled as their respective GMPs. There is, after all, some commercial sense in the notion that members with an entitlement to a GMP should not be able to have their notional share of the assets in the Scheme used to purchase a policy to secure a pension unless their rights to a GMP are as fully protected under the policy as they would be under rule 16(b) of the Scheme, particularly as such purchases can be effected without such members' consent. Furthermore, it does not appear to me that there is any primary statutory background to justify a departure from the natural and ordinary meaning of proviso E to rule 12(j) as there is in relation to proviso C.
- Whichever way one construes the relevant parts of provisos E and F to rule 12(j), they lie somewhat oddly with para (iv) of proviso C. If anything, it seems to me that the notion that they add something to para (iv), rather than duplicate it, is more attractive. It may well be that the prescriptive terms in which proviso E is framed reflected a belief on the part of the drafter of the Scheme that it was not open to the Trustee to buy out part only of a GMP on the basis that this was precluded by regulation 4(b) of the 1985 Regulations. Even if that is right, it does not entitle one to go behind the plain words of proviso E to rule 12(j); it might conceivably be different if the relevant words in that proviso were identical to the wording of para (iv) of proviso C, but they are not.
Agreement of the high GMP members or a truncated Arrangement
- Accordingly, the sole problem facing the Trustee in implementing the Arrangement successfully arises from the fact that the terms of provisos E and F to rule 12(j) would prevent stage one being operated to the extent that it results in the purchase of annuity contracts which produce annuities which do not provide GMPs in full.
- The only problem for the Arrangement relates to the high GMP members (i.e the sixty or so members of the Scheme whose level of GMP entitlement is such that completion of stage 1 of the Arrangement, completion of the current PBO contract, would not satisfy their GMP rights in full). It is common ground (because section 19(5)(a) of the 1993 Act would then be satisfied) that, if the Trustee can obtain the agreement of all the high GMP members to the Trustee entering into the Arrangement, then the Trustee can get round the problem thrown up by provisos E and F to rule 12(j), or, indeed (if I am wrong as to their non-existence) any of the other problems alleged to exist by the Company under issue (2). As a matter of commercial common sense, one would have expected the high GMP members to give their agreement to that course. However, there may be facts unknown to me which would cause one or more high GMP members to feel differently, and it may be difficult to contact one or more of the high GMP members to obtain agreement.
- If such agreement cannot be obtained, then the Trustee would propose entering into the so-called truncated Arrangement, which would involve the Arrangement being implemented only in respect of low GMP members - and presumably those high GMP members who had consented to the truncated Arrangement. The result is well illustrated by Mr Furness's re-working of the example set out in paragraph 7 above. Assume, for the sake of simplicity, that half the members, in terms of value, are high GMP members who all refuse to agree to the Arrangement. In those circumstances, only £5m of the total value of £10m in the Scheme would be used at stage 1 to purchase policies for the low GMP members. This would mean that, at stage 2, the Trustee will have assets of £5m and MFR liabilities of £11.25m, being £7.5m for the high GMP members and £3.75m for that proportion of the low GMP members who have not been bought out. So the MFR, and the consequent section 75 debt, will be £6.25m. So at stage 3, the Scheme will have assets of £11.25m to provide policies for the high GMP members and additional policies for the low GMP members. So, from the point of view of the total assets of the Scheme, the truncated Arrangement would produce a better result than the conventional exercise, but a less good result than the full Arrangement.
- The issue between the parties, however, concerns the question of how this £11.25m is to be distributed between the two classes of GMP members at stage 3. One solution would be for the high GMP members to receive £7.5m and the low GMP members to receive the balance of £3.75m. This would mean that the whole of the benefit of the Arrangement would be accorded to the low GMP members (not surprisingly as a matter of pure logic, as only the low GMP members' rights under the Scheme were, as it were, involved in the Arrangement). However, the Company contends, not only would that seem to be unfair, but it would be contrary to the requirements of section 73(2) and (3) of the 1995 Act, which would require the high GMP members to be treated equally to the low GMP members.
- If the high GMP members and the low GMP members are to be treated equally, in terms of ending up with the same level of pension, in terms of proportion of their total entitlement under the terms of the Scheme in the absence of a deficiency, then, in terms of the example, £8.125m of the £11.25m would be assigned to buying policies for the high GMP members, and the remaining £3.125m would be used to purchase additional policies for the low GMP members for whom policies had already been purchased for the total of £5m at stage one. That is the solution which is favoured by the Trustee, but it is said by the Company that this solution does not work, because it involves treating the low GMP members differently at stage two from how they are treated at stage three of the Arrangement.
- This issue was not much canvassed in oral argument, but I have reached the conclusion that the Company's objections to the Trustee's proposed solution are not well founded. The treatment of the low GMP members' rights under the three stages of the Arrangement is in the context of assessing the MFR for the purpose of assessing the section 75 debt, and that is a matter between the Trustee and the Company, which turns on the meaning of section 75 of the 1995 Act. How the section 75 debt is to be spent when it comes to purchasing annuity contracts for the Scheme members is a matter between the Trustee and the members, and is governed by the provisions of the Scheme and section 73 of the 1995 Act. Indeed, the Company's contention, mentioned at the end of paragraph 68 above, that differential treatment of the high and low GMP members would be impermissible as it would be inconsistent with the requirements of section 73 of the 1995 Act, is based on precisely that line of reasoning.
Conclusion
- I would therefore hold on issue (1) that, if it can properly be implemented, the Arrangement would achieve the end which the Trustee desires, namely enhancement of the section 75 debt due from the Company, and on issue (2) that there would only be an impediment to implementing the Arrangement in full if some or all of the high GMP members did not agree to it, and, if that happened, a truncated version of the Arrangement could be undertaken.
- I would suggest that counsel agree a form of order which reflects this outcome, which is very largely the same conclusion as that arrived at by the Chancellor.
Lord Justice Stanley Burnton:
- I agree.
Lord Justice Aikens:
- I also agree.
NOTE: Reasons for refusing permission to appeal.
Lord Neuberger of Abbotsbury:
- After we provided the draft judgment to the parties (who have suggested some useful corrections), Headway Ltd ("the Company") has applied for leave to appeal to the House of Lords (or Supreme Court). We have decided to refuse leave to appeal. Because of the complex nature of the case, it may assist those considering any petition to appeal (actual or draft) if we give short reasons for this conclusion.
- The issue on this appeal is not only technical, but is of limited general significance. The case ultimately concerns the validity and effectiveness of an arrangement to mitigate the consequences of statutory provisions which were amended in 2003. The arrangement under consideration in the appeal arose solely because the statutory debt payable by an employer such as the Company to an employee pension scheme in deficit was calculated on an artificial basis. Where a scheme was in deficit, the employer did not have to make up the whole of the deficit, and the purpose of the arrangement was to reduce this shortfall. But for pension schemes which go, or have gone on or after 11th June 2003, into winding up, the statutory debt is calculated on a market basis so there is no longer any reason for such an arrangement. While there will still be a number of pension schemes which went into winding up before June 2003 and where the winding up remains uncompleted, the issue in this case is nonetheless of limited general interest and importance.
- Further, the outcome of the case substantially turns on the terms of the particular Trust Deed and Rules, and therefore is "one off". In any event, although there was considerable debate about the interpretation of the Deed and Rules, our decision is, we believe, commercially sensible and logically coherent. In so far as any appeal is based on our decision as to the effect of those terms, an appeal to the House of Lords (or Supreme Court) would thus seem to be inappropriate.
- We would accept that the issue of the effect of the Regulations promulgated by the Secretary of State is potentially one of greater importance. However, we have not held that any part of the Regulations made by the Secretary of State is ultra vires or ineffective. Further, it cannot, we think, be said that our interpretation of the Regulations results in their having a surprising or unworkable effect. Indeed, we believe that the outcome is sensible, as reflected by the fact that it accords with the submissions advanced by the Secretary of State. In those circumstances, it is a matter for the House of Lords (or Supreme Court), not for us, whether leave to appeal should be given on this ground.
- Quite apart from this, the result of the appeal seems to us to be fair and sensible: it involves the Company, a highly solvent employer, having to make good the deficiency in its employees' pension fund to a rather greater extent than it would otherwise have to do. Nonetheless, even on the basis of our decision, the Company is still "getting away with" not making up the whole deficiency in the pension fund, to its benefit and to the detriment of its ex-employees.
- Furthermore, our conclusions in this case are pretty much the same as the Chancellor's at first instance (and our reasons are not very different, although perhaps rather fuller), so there have been two "rounds" with the same outcome.
