Manupatra

Fill in the following details to e-mail

Subject

<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd"> <html xmlns="http://www.w3.org/1999/xhtml"> <head> </head> <body> <div style="font-family:Verdana, Geneva, sans-serif; font-size:12px; text-align:justify"> <table width="800" border="0" style="border:1px solid #ccc;padding:5px;" align="center" cellpadding="6" cellspacing="0"> <tr> <td align="left" valign="top"> Trustees are not empowered to adopt an index other than RPI unless RPI had been discontinued as an officially published index and replaced - (07 Nov 2018) </td> </tr> <tr> <td align="left" valign="top">Barnardo’s v. Buckinghamshire and others</td> </tr> <tr> <td align="left" valign="top" style="background-color:#FDEDCE">Present appeal raises a question of interpretation of a clause in a pension scheme trust deed which defines the phrase “Retail Prices Index” and which allows the trustees of the pension scheme to adopt a “replacement” of the officially published Retail Prices Index (“the RPI”). 
The background is the recognised need for private pension schemes to provide some form of indexation of pensions to protect the value of members’ pensions against price inflation. Question is whether the clause allows the pension scheme trustees to adopt an index of price inflation, such as the Consumer Prices Index (“the CPI”), when the official body responsible for compiling the RPI (now the Office of National Statistics) has not discontinued the RPI, thereby requiring its replacement. 
Barnardo’s, the well-known charity who is the sponsoring employer, argues that the clause empowers the trustees to adopt another index which they consider a suitable measure of price inflation, whether or not the RPI continues to be published. The trustees of the pension scheme sought a ruling on the meaning of the Definition by a claim under Part 8 of the Civil Procedure Rules. In a judgment, it is held that, on a proper construction, the Definition did not empower the trustees to adopt an index other than the RPI unless the RPI had been discontinued as an officially published index and replaced. The Court of Appeal by majority dismissed Barnardo’s appeal. Barnardo’s sought permission to appeal. 
In deciding which interpretative tools will best assist in ascertaining the meaning of an instrument, and the weight to be given to each of the relevant interpretative tools, the Court must have regard to the nature and circumstances of the particular instrument. 
 A pension scheme has several distinctive characteristics which are relevant to the Court’s selection of the appropriate interpretative tools. First, it is a formal legal document which has been prepared by skilled and specialist legal draftsmen. Secondly, unlike many commercial contracts, it is not the product of commercial negotiation between parties who may have conflicting interests and who may conclude their agreement under considerable pressure of time, leaving loose ends to be sorted out in future. Thirdly, it is an instrument which is designed to operate in the long term, defining people’s rights long after the economic and other circumstances, which existed at the time when it was signed, may have ceased to exist. Fourthly, the scheme confers important rights on parties, the members of the pension scheme, who were not parties to the instrument and who may have joined the scheme many years after it was initiated. Fifthly, members of a pension scheme may not have easy access to expert legal advice or be able readily to ascertain the circumstances which existed when the scheme was established. 
The Court is persuaded that, the correct interpretation of the first sentence of the Definition is that RPI means “the RPI or any index that replaces the RPI and is adopted by the trustees”. A provision which provides for the circumstance of the official replacement of a cost of living index does not lack a rational purpose. Appeal dismissed.</td> </tr> <tr> <td align="left" valign="top" ></td> </tr> <tr> <td align="left" valign="top" >Tags : Pension scheme, Clause, Interpretation</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr>  <td align="left" valign="top">Source : newsroom.manupatra.com</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> <tr> <td align="left" valign="top">Regards</td> </tr> <tr> <td align="left" valign="top">Team Manupatra</td> </tr> <tr> <td align="left" valign="top">&nbsp;</td> </tr> </table> </div> </body> </html>