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”.