Rights and expectations

Expectations – as well as rights – often crop up in relation to pensions. In a celebrated case back in 1987- Courage – we find reference to employees’ expectations about the use of surplus. Members had no absolute right to surplus, but it was legitimate for them to expect trustees to press for benefit improvements on their behalf.

The leading authority is the 2017 case of IBM UK Holdings v Dalgliesh, where the Court considered a package of benefit changes, including the closure of the schemes to future accrual and a new early retirement policy. The High Court had decided that members had reasonable expectations that the existing benefits package would continue unchanged. The Court of Appeal disagreed. Members’ reasonable expectations were only one factor decision makers might take into account.

The careful distinctions made by lawyers in these sorts of cases are not always understood, and people often feel aggrieved by changes over which they have no control. The WASPI women for example, challenging the increase in their state pension age, said that they had made retirement plans on what they had expected. Plenty of notice was given, but even had communication been better those nearing retirement had limited ability to change their plans.

If there is one lesson to be gained from the Budget (a lesson easily learnt from our archives) it is that pensions are complicated and involve long term planning, and that abrupt changes to the tax framework will inevitably lead to disappointment – and sometimes to unintended consequences.

Pensions Archive Trust Director, Jane Marshall

This article was first published in the December 2024 edition of Pensions Age magazine.