The recent judgment in the High Court case of In the Matter of Sea Containers Services Ltd (in Liquidation) and others [2012] EWHC 2547 (Ch) provides warning of how important it is to draft agreements outside of the trust deeds and rules very clearly, so that it is obvious how they interact with scheme benefits.
Sea Containers had a final salary occupational pension scheme, which they equalised by raising the female normal retirement age to 65, in line with the male normal retirement age. A "Special Promise letter" was provided to about 40 female employees stating that if the employee "...still elect[s] to retire at her previous retirement age of 60, the Company shall provide a pension at age 60 equivalent to that which would have been available prior to the Pension Scheme changes..."
A number of questions arose from this "Special Promise" including whether the member had to retire specifically on her sixtieth birthday or simply in her sixtieth year, what it means to "elect to retire", whether the promise could be enforced against Sea Containers' parent company or only against Sea Containers and, whether, when determining how much the Special Promise was worth, only benefits under the scheme should be taken into account, or also benefits under separate schemes.
The court held that the member could retire at any time in her sixtieth year, that electing to retire meant that she must leave the service of an employer and immediately take a pension, that the Special Promise could only be enforced against Sea Containers, and that only the pension benefits under the scheme could be taken into account when determining the Special Promise's value.
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