Court of Appeal returns judgement on Lehmans pensions regulatory proceedings

A recent court of appeal judgement confirms that a pension scheme trustee is entitled to refer the issue of a financial support direction (fsd) to the upper tribunal.

28 June 2013

In its much awaited judgment on the pensions regulatory proceedings arising out of the collapse of Lehman Brothers ([2013] EWCA Civ 751), the Court of Appeal has confirmed that a scheme trustee is a Directly Affected Party ('DAP') in the context of a financial support direction ('FSD').

The Court held that a scheme trustee is more than a 'mere busybody' and is 'interested in a very real sense in the initial stage involving the determination to issue an FSD'.  The consequence of this decision, which many suspected to be the case but which is now certain, is that:

(i) a scheme trustee should always be served with a Warning Notice by the Pensions Regulator ('tPR') that contemplates issuing an FSD; and

(ii) as a DAP, a scheme trustee has a right to refer a determination by tPR's determination panel ('the DP') to (or not to) issue an FSD to the Upper Tribunal if it is not satisfied with the decision. 

Therefore, when faced with circumstances that may give rise to the issue of an FSD the scheme trustee and its advisors should make clear to tPR that it expects to be served with any Warning Notice.

Although decided in the context of FSDs, one would expect the Courts to take the same view in the context of contribution notices ('CN') given the similarity CN's and FSD's share in terms of the financial rights and obligations they impose on employers (or group companies) and the corresponding benefit conferred on the scheme trustee.

Although of limited wider significance due to subsequent changes to the Pensions Act 2004, the Court of Appeal also determined that the two year time limit for the issue of an FSD only related to the determination to issue an FSD and not to a subsequent referral to the Upper Tribunal.

It will be interesting to see if the Northern Ireland Court of Appeal reaches the same conclusion in relation to the time limits applicable to the issue of CNs in its impending judgment on the appeal of Desmond v The Pensions Regulator and Garvin Trustees Ltd, in which Burges Salmon acts for the scheme trustee.

Justin Briggs and Matthew Walker advise trustees and others on Pensions disputes.

Key contact

Justin Briggs

Justin Briggs Partner

  • Pensions Disputes
  • Trustees and Trust Companies
  • Professional Negligence

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