The High Court has ruled in a rare instance of a court overturning a decision of The Pensions Ombudsman, whereby Coats’ pension scheme members are not entitled to annual increases of 5%.

Rosalind Connor said that, while the judgment was case-specific, there were several learning points for trustees to consider.

First was that, despite the existence of “notes” in the drafting of rules, the court did not place much weight on these, demonstrating it is important for trustees and draftsmen to document their decision-making process well.

“It isn’t uncommon for old schemes to have notes in the drafting, which might explain what changes are attempted, or what it is the draftsman is trying to do, and the court seemed quite clear that these were not particularly helpful,” she said. “It is a good warning that notes shouldn’t be relied on if a clear piece of drafting can be put in place instead.”

Rosalind added that it was uncommon for TPO cases to be referred to the High Court, with the ombudsman often bypassed if trustees want to clarify the law.

Rosalind said that, “Historically, very few cases have come to the High Court this way – more usually, the trustees themselves go to the High Court for a direction on the law, but this may be part of a growing trend as more technical issues are raised to the ombudsman, that interpretation of deeds is reviewed by the ombudsman and, perhaps, is discussed further by the High Court on appeal.”

Read Rosalind’s comments in Professional Pensions