The High Court ordered a Consumer Price Index (CPI) cap to be added to a 1993 rule governing pension increases under the Central Remedial Clinic Pension and Death Benefits Plan. The court found that the rule did not reflect the continuing intention of the trustee and the sponsoring employer, Central Remedial Clinic (CRC).
The dispute concerned a special rule providing for a 5% annual compound increase to pensions. The plaintiff, Irish Pensions Trust Limited, argued that increases were always intended to be capped by the CPI and sought rectification of the rule. Retired pensioner Richard Tierney, joined as a representative defendant for pensioners receiving payments, opposed the relief. The judgment said uncapped increases could have serious consequences for the scheme’s funding.
The court considered explanatory booklets issued to members from 1978 onwards. They consistently described annual increases of 5% compound, provided the increase did not exceed the rise in the cost-of-living index or CPI. The court also considered how the scheme had been administered: with one exception, pension increases had been paid on the basis that the CPI cap applied. The plaintiff and CRC had continued funding the scheme on that basis, and the court found no evidence that adopting the 1993 rule was intended to change the existing arrangement.
The judge concluded that the plaintiff and CRC shared a continuing intention for pension increases to be capped at the CPI. He found that the 1993 rule had been adopted under a mistaken belief that another rule already imposed that cap. The court held that rectification was available and that the plaintiff was entitled to it.
The plaintiff had also sought, in the alternative, to set aside the rule, have it declared void, or obtain declarations about the effect of the governing documents and explanatory booklets. The judge said it was not strictly necessary to decide those claims after allowing rectification. He nevertheless stated that, if required, his view on whether the booklets prevailed over conflicting special rules would have favoured the plaintiff.
The court directed that the 1993 special rule be rectified by adding words providing that an increase “shall not exceed the cumulative percentage increase in the Consumer Price Index since the Members Normal Pension Date.”