CMG PENSION TRUSTEES LIMITED v CGI IT UK LIMITED
2022
CHANCERY DIVISION
United Kingdom
CORAM
- MR JUSTICE LEECH
Areas of Law
- Employment Law
- Equity and Trusts
- Civil Procedure
2022
CHANCERY DIVISION
United Kingdom
CORAM
AI Generated Summary
The Trustee of the CMG UK Pension Scheme sought guidance on Rule 5.11 after discovering member underpayments caused by delayed implementation of equalisation and accrual rate changes. CGI IT UK Ltd, the Principal Employer, maintained Rule 5.11 is a forfeiture provision that extinguishes unclaimed benefits after six years. Applying modern construction principles and reviewing statutory history and the schemes archaeology, Mr Justice Leech held Rule 5.11 is a general forfeiture clause: lump-sum shortfalls and underpaid pension instalments more than six years old are extinguished unless the member made a qualifying post-due-date claim (continuing claims can suffice). Retirement Option Forms were not claims. Interest at base plus 1% applies to adjustments. For disputed recoupment, s.91(6) requires a competent court order; a declaration of entitlement suffices, and the Pensions Ombudsman is not a competent court.
I. Preliminary Matters
By Amended Claim Form dated 1 April 2022 the Claimant, CMG Pension Trustees Ltd (the “ Trustee ” or the “ Trustees ”), seeks the determination of certain issues relating to the construction and effect of Rule 5.11 (“ Rule 5.11 ”) of the current rules of the CMG UK Pension Scheme (the “ Scheme ”) under CPR Part 8. On 28 September 1973 the Scheme was established and since that date the Trustee, which is a company limited by guarantee and was formerly known as CMG Computer Management Group (Pension Trustees) Ltd, has been the corporate and sole trustee of the Scheme.
The Defendant, CGI IT UK Ltd (the “ Employer ”), is the Scheme’s Principal Employer and has been since 30 April 2010. The Claim Form was originally issued on 20 May 2021 and also named CMG Ltd (“ CMG ”), which was the Scheme’s Principal Employer from 1 October 1973 until 29 April 2010, as the Second Defendant. CMG is no longer a party to the action (although nothing turns on this).
The Scheme is both a defined benefit pension scheme and a defined contribution pension scheme. This claim is concerned only with the defined benefit scheme which closed to future accrual on 30 April 2010 (when the change of Principal Employer took place). From 2009 onwards the Trustee and its advisers had begun to identify issues relating to the way in which benefit changes had been implemented and the Scheme had then been administered and which resulted in benefits being underpaid to members. The Trustee took steps to address these issues and then to pay off the arrears to members.
In September 2019 the question arose whether the Trustee should pay arrears to members which fell due for payment more than six years earlier. This issue turns on the construction and effect of Rule 5.11 and provoked a difference of view. The Employer contended that Rule 5.11 is a forfeiture provision and that its effect is (and was) to forfeit all sums which fell due for payment more than six years before. The Trustee argued that Rule 5.11 is not a forfeiture provision and did not have that effect in the present case.
I am now asked to determine nine issues which have arisen or may arise out of the construction and effect of Rule 5.11. The effect of Rule 5.11 turns (at least in part) on whether members entitled to benefits under the Scheme have made “claims” for those benefits within the six year period prescribed by the rule. For the purpose of deciding those nine issues I am asked to assume that claims were ma