In a detailed judgment, the High Court has ruled that IBM UK breached its duty of good faith in the way in which it closed the DB section of its pension schemes to future accrual and introduced new benefit restrictions (for both employees and former employees).
“The judge (Mr Justice Warren) also found that consultation with employees about the changes was not open or transparent and held that this was also a breach of IBM’s duty of good faith. The remedies flowing from the breaches will be considered at a later hearing.”
Nabarro LLP represented the pension scheme trustee in this case. Legal experts Jeniffer Bell and Neal Gibson of the law firm have provided an excellent (if I may say so) jargon free summary which everyone involved in pensions negotiations should read.
They say, “this case is an important step in establishing the extent of the obligations employers owe their employees and former employees in relation to pension provision. It will be of great interest to any employer who has, or who is considering, ceasing DB accrual or introducing new restrictions on benefits. Key to this decision were the communications issued to members in the months and years before the changes were made – these were found to have given members Reasonable Expectations as to their future pension benefits.”
You can download their legal briefing here for free here or contact the authors of this summary directly: :email@example.com and firstname.lastname@example.org . Alternatively write: Nabarro at Lacon House, 84 Theobald’s Road, London: http://www.nabarro.com/
Nabarro also publish a number of other briefing, around pensions, including on covering the 2014 budget. These and other reports can be accessed free from legalweeklaw.