Earlier this year, the case of Verity Trustees v Wood took place over 32 days in the High Court. This makes it the longest pensions case in history just addressing questions of law. The case considers a wide range of different issues, so we have highlighted just a few of these here which are expected to be of interest to other schemes. Linklaters acted for Verity Trustees in the case, and judgment is expected later this year.

Section 37

Although the DWP’s recent announcement about section 37 is good news for schemes, the questions in Verity Trustees about section 37 will still be relevant to many schemes. In particular, the case is considering the scope of amendments requiring a section 37 confirmation, which will affect which amendments a retrospective certificate will need to be provided for. It is also looking at how closure to accrual could be validly achieved, with the representative beneficiary arguing it would only be valid if the contracting-out certificate was surrendered in advance of closure.

Other questions include:

• whether an amendment could be valid from the next ‘triennial reassurance statement’ from the Scheme actuary or a subsequent deed referring to it in the recitals;

• where a deed makes a number of changes, are the changes which wouldn’t require a section 37 confirmation automatically valid; and

• the implications of a section 37 underpin on the requirement for a section 37 confirmation.

Amendment power restrictions

Another significant issue in the case is whether an amendment power preventing detrimental changes to ‘rights’ protects future service changes. This follows the decisions of the Court of Appeal in BBC and Virgin Media last year.

Pro rating increases

A question likely to be of interest to a number of schemes is whether the pension increase in the first year after retirement can be pro rated without an express rule providing for this. This is being considered in this case in light of provisions in the Apportionment Act 1870.

Severance

Finally, another significant area relates to how an invalid part of an amendment can be separated from a valid part, and what test should be applied. The case will consider whether it needs to be shown that the parties to the change would still have made it had they known of its more limited effect.