Week ending 18 January 2019
High Court overturns Ombudsman decision
In a surprise turn of events, the High Court has overturned a ruling made by the Pensions Ombudsman about pension increases in the Coats Pension Scheme. The Ombudsman had previously decided that members of one section of the Coats Scheme are entitled to an annual increase of 5%, as set out in their former scheme’s 1996 rules. This 5% level of increase was initially restricted by Inland Revenue limits. When those limits were effectively removed in 2008, the Trustees tried to make a rule amendment, in order to continue to restrict pension increases in the same way. However, the Ombudsman concluded that 5% increases should have applied since 2008, because the rule amendment was invalid.
Whilst the High Court agreed with this last point, it has decided that the trustees’ intention to make the change (as evidenced by a trustee resolution to that effect) was enough to make it valid under section 68 of the Pensions Act 1995, which allows a change via “exercise of any power conferred on any person by a scheme to modify the scheme”.
£425 million buy-in for Co-op Somerfield
Pension Insurance Corporation (PIC) completed its first buy-in of 2019 with the Co-operative Group’s Somerfield Pension Scheme, insuring around £425 million of the Scheme’s pensioner liabilities. The Scheme’s overall liabilities, according to data released as at 31 March 2018, are approximately £1.1 billion, with 12,873 members.
Two-year low for inflation
December 2018 saw a drop of 0.2% for CPI inflation – taking it from 2.3% to 2.1%. This was in line with forecasts, but still approaching its lowest rate for two years according to the Office for National Statistics. Forecasts suggest that there will be a further drop this month.