The High Court has dismissed Michael Durkin’s appeal against a Pensions Ombudsman determination concerning a cap on the salary used to calculate his pension benefits under the SIAC Construction Limited Non-Contributory Pension and Death Benefits Plan.
Mr Justice Kearns delivered the judgment on 9 September 2015. The appeal, brought under section 140 of the Pensions Act 1990, challenged the Ombudsman’s 6 May 2014 decision dismissing Mr Durkin’s complaint. The High Court was considering a limited statutory appeal, not rehearing the dispute from the beginning. Mr Durkin had to show that the Ombudsman’s decision involved a serious and significant error, or a series of such errors.
Mr Durkin worked for SIAC Construction from November 1990 until he was made redundant on 20 January 2012. A 2008 deed of amendment allowed the employer, subject to written notice to the trustees and a member’s prior written consent, to limit the salary and bonus figures used to calculate pensionable salary.
Mr Durkin disputed the pension figure in an options document issued after he left. His legal advisers argued that his pensionable salary should have been calculated using his basic salary and bonuses. He also argued that his December 2008 acceptance of the revised arrangements was conditional on defining pensionable service to cover his full period of employment and clarifying the long-term incentive scheme. Separately, he said any reduction in preserved pension benefits had to be phased in under the Act.
The trustees rejected his complaint in July 2013, finding that he had consented in December 2008 and in a letter signed in April 2009. The Ombudsman dismissed his later complaint in May 2014. The Ombudsman found that the December 2008 memorandum amounted to consent; its requests about pensionable service and the incentive scheme did not invalidate it. The Ombudsman also concluded that the salary cap did not trigger the statutory phasing-in requirement. The Ombudsman had described the consent process as falling short of best practice, but found no negligence or fraudulent intent.
On appeal, Mr Durkin argued that the required written consent had not been provided to the trustees and that the 2008 amendment changed the basis for calculating long-service benefits. The Ombudsman maintained that the consent finding was reasonable and that the amendment allowed a cap with employee consent without changing the pension plan’s salary-related basis.
The High Court held that the Ombudsman had given reasoned explanations on both issues. It accepted the Ombudsman’s reasoning on phasing in and found no serious or significant error in the determination. The court dismissed the appeal; it did not order a different pension calculation.