Company Pension changes

Trumpeter

I don't know if this should have been posted in the Employment section but here goes anyway.


I've been in my company final salary pension scheme for almost 38 years, from the age of 18.
The scheme booklet states that the normal retirement age for the scheme is 65 years but members can take early retirement at 60 – 64 years with no reduction in benefit if the retirement is with the Employer's consent.


In the years I've worked for the company, people have always been allowed to retire early on these terms. In other words, when someone has requested early retirement at 60 or above, the request has NEVER been refused.


Would this constitute Custom & Practice & if so, does it have a stronger legal standing that the written terms which have never been applied?


The company is now trying to change the rules whereby people can still retire early with the employer's consent but they will now lose 5% p/a for ever year that they are under 65. IE a 25% reduction in their expected previous pension.


In my particular case, I am now faced with the options of working for an extra five years (on shifts, in heavy industry) or accepting a huge drop in the benefits that I have been led to belive that I will be entitled to. I do not have enough time to find an alternative way of funding these years to be able to leave at 60 & defer taking the pension until I reach 65.


The company states that there is a large potential deficit in funding but has previously (mis)used the scheme, in agreement with the trades unions, to encourage people to retire early whenever they have wanted to reduce manning. Put simply, the pension scheme funds have been used as an alternative to the company paying for hard redundancies.


The unions appear to have given up the fight & are recommending that their members accept the company's proposals.

kidmugsy

Trumpeter wrote: »

or accepting a huge drop in the benefits that I have been led to belive that I will be entitled to.

But you've just told us that you are not entitled to them.

Trumpeter

kidmugsy wrote: »

But you've just told us that you are not entitled to them.

Sorry but I think that I am.

I've paid into the scheme with the rules as they stand for 38 years. 3 years ago we were told that there was a deficit for the first time in it's almost 50 year history.

At that time we made alterations in the form of increased contributions & a decreased accrual rate (went from 1/60th to 1/65ths) & were told this was enough to solve the problem.

In the meantime, we have had statements from the chair of the trustees which have told us that the scheme is well funded & has won awards as being the best run scheme in Europe.

And now this......

Trumpeter

Quoting directly from the first lines of the latest communication from the board of Trustees....

British Steel Pension Scheme
Information Debriefing following December 2014 Trustee Meeting:
(for the purposes of cascading pensions information)

The Fund's continued strong management and performance received further external recognition
at the Investment & Pensions Europe 2014 awards where it won the Best In-House Investment
Team and Best UK Pension Fund and was shortlisted for the Gold Award for overall Best
European Pension Fund and the Silver Award for Best Corporate Pension Fund

dunstonh

In my particular case, I am now faced with the options of working for an extra five years (on shifts, in heavy industry) or accepting a huge drop in the benefits that I have been led to belive that I will be entitled to.

Your scheme retirement age has always been 65. That hasnt changed.

What is changing is the option that you may have been allowed earlier retirement, subject to approval, to one that does allow you earlier retirement without approval and subject to inconsistent or even no reductions but to one with a fixed reduction.

A quick look online indicates that the British Steel pension always had the option of an actuarial reduction but it was not consistent but applied on a case by case basis.

Trumpeter

dunstonh wrote: »

Your scheme retirement age has always been 65. That hasnt changed.

What is changing is the option that you may have been allowed earlier retirement, subject to approval, to one that does allow you earlier retirement without approval and subject to inconsistent or even no reductions but to one with a fixed reduction.

A quick look online indicates that the British Steel pension always had the option of an actuarial reduction but it was not consistent but applied on a case by case basis.

The point of my initial question was if what is written in the rule book has more or less legal standing that the actual policy which has been applied for almost 50 years?

I think that I (and others of course) have been led to believe that there is a reasonable expectation that what has been applied in the past should continue into the future.

When you state that the previous policy was not consistent & was applied on a case by case basis, this is not true. The application was entirely consistent in that no-one was ever refused early retirement & therefore no loss of benefit was ever incurred.

Many people have made lifetime decisions affecting their whole future based on this.

kidmugsy

But you quoted your entitlement
"the normal retirement age for the scheme is 65 years but members can take early retirement at 60 – 64 years with no reduction in benefit if the retirement is with the Employer's consent." That's what you are entitled to. You naturally would like a privilege extended to you that has often/always been extended to others in the past. But a precedent is not an entitlement. You can't just invent new meanings of words in English to suit yourself.

Trumpeter

kidmugsy wrote: »

But you quoted your entitlement
"the normal retirement age for the scheme is 65 years but members can take early retirement at 60 – 64 years with no reduction in benefit if the retirement is with the Employer's consent." That's what you are entitled to. You naturally would like a privilege extended to you that has often/always been extended to others in the past. But a precedent is not an entitlement. You can't just invent new meanings of words in English to suit yourself.

Isn't English case law built on precedent?

dunstonh

Isn't English case law built on precedent?

Pension scheme rules are not law.

Trumpeter

dunstonh wrote: »

Pension scheme rules are not law.

But must surely be subject to law??

kidmugsy

Trumpeter wrote: »

Isn't English case law built on precedent?

So what? You could argue that your canteen used to serve fish and chips on a Friday, and that precedent would insist they must therefore always do so. Maybe the boss used to bonk his secretary therefore the next secretary must cooperate too.

I can't see any case in equity for forcing a scheme to treat a historic privilege as an entitlement. Certainly when I retired I was denied an ancient privilege. So be it: I had always thought it a loopy extravagance. No wonder they stopped it.