The High Court has today handed down a much-anticipated
decision, Prudential Staff Pensions Limited v The Prudential
Assurance Company Limited. The case considered important issues in
relation to an employer's duties to pension scheme members. It
did so in the context of an increasingly fraught area: changes to
the basis of discretionary pension increases.
The background
Under the Prudential Staff Pension Scheme ("the
Scheme"), pensions were reviewed annually. The Scheme rules
provided the trustees could pay "such additional benefits
under the Scheme... as the Employer shall determine subject to any
condition or qualifications which the Employer may
require."
For a period of fifteen years, the employer used this rule to
make discretionary pension increases, over and above those required
by statute, that were broadly in line with increases in the retail
prices index ("RPI"). However, in 2006 the employer
revised its policy. The starting point for its new approach
