Anthony Beaton v The Board of the Pensions Protection Fund
| Jurisdiction | England & Wales |
| Judge | Mr Justice Nugee |
| Judgment Date | 12 October 2017 |
| Neutral Citation | [2017] EWHC 2623 (Ch) |
| Date | 12 October 2017 |
| Court | Chancery Division |
| Docket Number | No. CH-2016-000303 |
[2017] EWHC 2623 (Ch)
IN THE HIGH COURT OF JUSTICE
CHANCERY DIVISION
Rolls Building
Mr Justice Nugee
No. CH-2016-000303
Mr D. Grant appeared on behalf of the Appellant.
Mr K. Rowley QC (instructed by Gowling WLG (UK) LLP) appeared on behalf of the Respondent.
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I have before me an appeal from the Ombudsman for the Pension Protection Fund. He was established under s.209(1) of the Pensions Act 2004, which provides,
"There is to be a commissioner to be known as the Ombudsman for the Board of the Pension Protection Fund (in this Act referred to as the 'PPF Ombudsman')".
The PPF Ombudsman is a separate statutory creature from the Pensions Ombudsman, although at present, and I understand as a matter of policy, the individual who holds that office, Mr Anthony Arter, is the same individual who holds the office of Pensions Ombudsman.
The PPF Ombudsman, who I will refer to as "the Ombudsman", is given functions under the Pensions Act 2004 in relation to reviewable matters, which are dealt with by s.206(1), which provides that,
"For the purposes of this Chapter, 'reviewable matter' means a matter mentioned in Schedule 9".
I was not taken to Schedule 9, but it is not in dispute that one of the matters which is a reviewable matter is the amount of compensation payable to the member of a scheme which has entered the PPF, that is for which the Board has accepted responsibility.
In the present case, Mr Anthony Beaton (the appellant) is a member of a scheme which has entered the PPF and, under the provisions of the Pensions Act 2004, he was entitled to ask the Board of the PPF to review and reconsider matters, which they did, and, in the event that he was dissatisfied with the decision of the Board, and its Reconsideration Committee, he was entitled to bring the matter before the Ombudsman, which he did. The Ombudsman made a decision adverse to him, and there is an appeal (by s.217(1)) to the High Court. Section 217(1) of the 2004 Act provides:
"A person bound by a determination or direction by the PPF Ombudsman by virtue of regulations made under section 213 or 214 may appeal on a point of law arising from the determination or direction —
(a) in England and Wales, to the High Court …".
Mr Beaton is a person bound by the Ombudsman's determination, because under regulations, which are The Pension Protection Fund (Reference of Reviewable Matters to the PPF Ombudsman) Regulations 2005 SI 2005 No. 2024, the determination of the Ombudsman is final and binding on the persons to whom notice or notification is given, and that includes the parties to the reference, and that includes Mr Beaton (see regulation 16(4)(a) and (5)(a)). Mr Beaton required permission to appeal, which was granted by Snowden J.
The underlying facts are not in dispute. I can take them from the skeleton argument of Mr Grant, who appeared for Mr Beaton. Mr Beaton was born in 1952. He commenced employment as an insurance broker for C T Bowring & Co in 1973. He became a member of the Bowring Group Staff Pension and Assurance Fund, which can be referred to as the "Bowring Scheme". He left employment with Bowring in 1994 and commenced employment with a company called Fenchurch Group plc and commenced pensionable service in the Fenchurch Group Pension Scheme ("the Fenchurch Scheme"). Both those schemes, and the Lambert Scheme, which I will come to, were final salary pension schemes.
As well as commencing as an active member in the Fenchurch Scheme, Mr Beaton was entitled to deferred benefits in the Bowring Scheme and entitled under statute to take a cash equivalent transfer value in respect of those benefits. He was offered, and accepted, a pension in the Fenchurch Scheme in return for his statutory transfer value, and the offer which he accepted was to have a fixed pension, which was initially quoted to him at £46,727.39 at age 65 but, because the transfer value ended up being slightly larger than had been anticipated, in fact bought him a fixed pension at age 65 of £47,633.22. I will call that the "£47,000 Pension".
He remained in pensionable service in the Fenchurch Group Scheme until that scheme was transferred into a successor scheme called the Lambert Fenchurch Staff Pension Scheme ("the Lambert Scheme"). That transfer took place with effect from 1 st August 1998. The announcement to the members of the Fenchurch Scheme indicated that the company (then called Lambert Fenchurch Limited), which then operated two pension schemes, wished to merge the two schemes by transferring all of the assets and liabilities of the Fenchurch Scheme into the Lambert Fenchurch Scheme. It offered membership of the Lambert Scheme to the members of the Fenchurch Scheme, including Mr Beaton, for future service, and Mr Beaton took up that offer. It also made clear that if a member decided not to join the Lambert Scheme, his or her benefits earned under the Fenchurch Scheme up to 31 st July 1998 would be transferred in any event to the Lambert Scheme. Mr Beaton remained in the Lambert Scheme, but in 2005, the principal employer of the Lambert Scheme went into administration and the scheme entered an assessment period for the PPF and in due course the PPF assumed responsibility for it.
Mr Beaton was then entitled to a pension of two origins, if I can put it like that. One was the £47,000 Pension, which he had originally earned by his service in the Bowring Scheme between joining the Bowring Scheme in 1973 and leaving it in 1994, and the second was his final salary benefit under the Fenchurch Scheme and Lambert Scheme, which instead of being a fixed amount, was based on his service in those schemes and his final salary. He in fact took early retirement in, I believe, 2007, and drew a lump sum, and he was left with a residual pension which, because of the operation of the compensation provisions in the Pensions Act, which I will in due course have to come to, amounted to initially some £17,000 a year. It has recently increased, I was told, to about £2,100 a month (or some £26,000 a year) as a result of provisions which give those with long service extra compensation, but the significant point, for present purposes, is that in calculating the amount of compensation to which he is entitled, the Board of the PPF had aggregated the £47,000 Pension with his pension from the Fenchurch and Lambert Schemes and applied the cap to the entire amount.
In this appeal, Mr Beaton's contention is that they were wrong to do so and that the cap should have been applied separately to the £47,000 Pension, and the remaining pension, with the result, I was told, although the detail of this is not in evidence, that Mr Beaton believes that if he succeeds in the appeal, he will be entitled to two pensions of roughly the same amount, although that is subject to a number of outstanding matters, which are not before me, and I am not able to ascertain the precise financial impact that a successful appeal would have for Mr Beaton, nor is it necessary for me to do so. The question, and the sole question, which arises on this appeal is whether Mr Beaton is right that the PPF should have calculated the compensation payable to him separately for the £47,000 Pension and his remaining pension or whether, as the PPF held, and as the Ombudsman decided, the two pensions should have been aggregated before application of the cap.
It is not necessary for me to go through the history of the way in which the dispute played out before the Board of the PPF and was reviewed and then reconsidered by the Reconsideration Committee. At all stages, the PPF stuck to its view that the two pensions should be aggregated for the purposes of calculating compensation. There were at earlier stages different arguments being put forward but all those have fallen away. The final argument, raised for the first time, I believe, before the Ombudsman, was that on the correct construction of para.26 of Schedule 7 to the Pensions Act 2004, the two benefits were not to be aggregated. That requires looking at Schedule 7, which sets out various rules in relation to the compensation payable by the PPF. As Mr Rowley QC, who appeared for the PPF, reminded me, the PPF has no power to pay benefits other than in accordance with the legislation, and that is a question of vires. He also reminded me that the PPF is not publicly funded; it is funded by levies on occupational pension schemes and any payment which it makes in accordance with the statute has to be funded by the levy payers. There is no question, therefore, of the answer to this dispute being determined, or even affected, by whether one does or does not have sympathy for the plight in which Mr Beaton finds himself, although it is noticeable that he was expecting a very much larger pension than that which he is currently being paid and one can understand that that causes him considerable financial...
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