30 May Rosalind Connor comments in Professional Pensions on the implications of the BA judgment on trustee conduct

After three and a half arduous years, British Airways (BA) pensioners will be celebrating a landmark High Court judgment allowing trustees to award a 0.2% discretionary increase.

BA sought to individually criticise member-nominated trustees (MNTs) for the process in which they came to their decision to award an increase. A number of MNTs took to the stand, along with employer-nominated trustees (ENTs).

The judge in the trial rejected this view, and noted how the end position for the scheme was different to the starting point of these trustees.

Rosalind Connor commented that this shows that a compromise position demonstrates that trustees took into account other factors and that standing for a particular issue does not necessarily put you in a dangerous, and potentially unjustifiable, place.

“This sounds like you then improperly exercised your discretion, but what the court said here, firstly, is that it is still quite a challenge to make the leap that just because someone says they were going to do something, it doesn’t then mean the trustees necessarily acted in that way,” she argued.

“But, in this case, they compromised. Therefore, you can’t say they were just doing the thing they were voted in on without thinking about it, because they clearly thought about it and ended up somewhere different.”

Rosalind added that trustees should be more comfortable in applying different weights to different factors:

“If you have a decision to make as a board of trustees, you have to take into account the right things and not things that are irrelevant,” she stated. “The trustees here just gave things different weights from the weights that were given by those advisers.

“You can disagree with your adviser and be fine, as long as you have taken into account what they have said and you haven’t been taking into accounts things you shouldn’t. This judgment should give trustees a lot of courage that they don’t have to agree with their advisers.”

Read the full article in Professional Pensions here