Compromising pension disputes

Driven by the public policy of encouraging settlement of disputes, the Court of Appeal has handed down its long awaited judgment in IMG (UK) Limited v Peter German and HR Trustees Limited 2010, confirming that section 91 of the Pensions Act 1995 is not a complete bar to compromising disputes over pension rights. 

Section 91 provides that any agreement to surrender a pension entitlement or right to a future pension under an occupational pension scheme is unenforceable. However, the Court of Appeal has held that the section is limited in scope to rights and entitlements to future benefits and does not extend to disputes over whether those rights actually exist!

This seems like a logical decision and will allow many trustees and employers to breathe a sigh of relief. If compromise was not allowed then, if certainty were to be achieved, every case would have to be taken to the Court or Ombudsman for a ruling. 

The Court did, however, go out of its way to make clear that the ruling only applies to compromises of genuine disputes in good faith and does not open the ‘back door’ to surrender agreements. For this reason, there are still likely to be instances where such agreements are not effective, for example, where there is no genuine dispute! 

IMG (UK) Limited v Peter German and HR Trustees Limited 2010

[The information and commentary contained in this blog does not, and is not intended to, amount to legal advice and does not form the professional advice or opinion of any Solicitor or Law Firm]