Wendy Lambert on who owns pension scheme surplus.

Wendy Lambert is a solicitor Hammond Suddards.

The David and Goliath angle on last month's Court of Appeal decision in the National Grid case has guaranteed colourful headlines. But most pensions lawyers conclude that the principles set out in the judgment are not new at all – they simply confirm the existing law.

The case arose from a complaint by two pensioners to the pensions ombudsman, that National Grid had misused the surplus in its pension scheme by offsetting its liability to pay additional contributions against an actuarial surplus.

Although the ombudsman found in favour of the pensioners, the High Court overturned his determination on appeal.

Reversing the decision of the lower court, the Court of Appeal has now held that the scheme rules required emp-loyers to pay the additional contributions, notwithstanding the existence of a surplus.

It rejected debates as to the true nature and ownership of an actuarial surplus as irrelevant. Instead it confirmed the principle that members of a pensions scheme have no automatic right to benefit from a surplus. They do not "own" the surplus, but are entitled to have it dealt with fairly.

The appeal judges also disposed with the contention made by the ombudsman that an employer's powers under a pension scheme are always of a fiduciary nature. The current law is that only certain limited powers are fiduciary, for example the power to appoint trustees.

Had the ombudsman been correct, an employer would have been required to sacrifice any self interest in favour of the members.

Instead the court confirmed the principle first set out in Imperial Group Pension Trust v Imperial Tobacco that the duty of the employer is to conduct itself in a manner which is not calculated or likely to damage the relationship of trust and confidence between employer and employee.

So the appeal court has confirmed yet again that scheme rules are there to be followed. It was not the results of the employer's actions which the court found objectionable, but the means of achieving them.

The court went as far as to suggest that the employer could quite properly have achieved its aims by amending the scheme rules.