Walker Morris comments on order for ‘serial rectification’ of pension deeds

In autumn of last year the High Court handed down its eagerly awaited judgment in IBM UK Pensions Trust Ltd v IBM UK Holdings[1], finding that a deed created in 1983 (and subsequent replacement deeds) seeking to confer flexible retirement provisions upon certain employees should be retrospectively rectified so as to give effect to these intentions. The order for ‘serial rectification’ of the pension deeds is a practical lesson for employers and trustees executing consolidating documentation.

In the 1980s IBM decided to incorporate a sub-section (the C Plan) into its main pension plan. IBM had sought to give active pension scheme members the right to flexible retirement, i.e. retire at 60 instead of 63 without an actuarial reduction. However, IBM were advised that because of preservation requirements at the time (occupational pension schemes must offer preserved benefits to early leavers if they meet certain criteria) the C Plan would also be extended to deferred pension scheme members, which IBM wanted to avoid. IBM was therefore instructed that a provision should be included in the trust deed stating that the ability of active members to take early retirement was subject to IBM’s consent; and although the provision was amended accordingly, the issue was not communicated to the decision-makers within IBM or the trustee of the scheme. The C Plan was amended on a number of occasions subsequently, with each new trust deed and rules containing virtually identical provisions on flexible retirement…

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