Union Unite is preparing to reballot employees at ICT company Fujitsu on strike action, in a long-running dispute that – among other things – involves a change to the ICL defined benefit section’s late retirement factor.

Unite argued that the wording of the relevant pensions documentation implied the LRF was ongoing.
One scheme member, Mr N, took a complaint to the pensions ombudsman, who in January did not uphold it. The appeal period for the case has lapsed without an appeal being made.

Pensions ombudsman Anthony Arter wrote: “While I can see why Mr N has interpreted [the pension statement] as meaning that the LRF is applied on an ongoing basis, I cannot agree with this interpretation because the pension statement does not state what that factor will be. Examples are given in the pension statement based on 9 per cent and 12 per cent, but there is no suggestion that these are necessarily the factors that would be applied.”

Partner Vikki Massarano was surprised by the apparent ease with which the ombudsman took this decision.

“Had I been advising those trustees I maybe wouldn’t have been quite so confident of getting that outcome,” she said.

Although Vikki called accrued benefits a “woolly concept”, she agreed LRFs did not constitute such an accrued benefit.
But if taken further, the case could be influenced by the way the changes were communicated, she pointed out, particularly if some members were encouraged by the company to stay on based on specific LRFs.

“It’s really important to think about what you say to people,” she said. “There is a fine line between making something simple enough so people can understand it, while maintaining enough accuracy that you’re not going to generate either inaccurate expectations or create an expectation that you then end up stuck with.”

Read the full article in Pensions Expert here.