Pensions equalisation claims: An alternative approach to calculating limitation?

What happened in the case?

The 1990 Barber decision confirmed that male and female members of pension schemes should have the same normal retirement date. In 1995 the defendant drafted a deed to equalise retirement ages at age 65. However, in 2017, the claimant became aware that the attempt to equalise in 1995 had failed. In fact the scheme did not equalise until a further deed (also prepared by the defendant) was executed in 2002. This added an additional seven years to the Barber window during which male members had continued to accrue benefits on the basis of a normal retirement age of 60. This resulted in an unanticipated increase in the liabilities of the scheme.

The claim was brought in 2017. The recent decision relates to two interim applications. Firstly, the claimants applied to amend their claim to include reference to documents created after the 2002 deed which showed ongoing negligent advice. Secondly, the defendant applied to strike out the claim because of the expiry of the limitation period. The case is interesting because of the judge’s conclusions in relation to the second application.

The claimants considered the claim was not time barred. They relied on (i) the saving 15 year longstop provision in section 14A of the Limitation Act 1980 and (ii) an argument under section 32 of the Limitation Act 1980 that the defendant had realised their negligence in relation to the 1995 deed and sought to conceal it by preparing the 2002 deed without express instructions to do so.

In view of a standstill agreement, in order to rely on the 15 year longstop the claimants needed to demonstrate negligence by the defendants on or after 15 December 2002. They argued that, as the defendant was the administrator of the scheme, its duty to the claimants in respect of equalisation did not end when it provided its advice on the 2002 deed. Instead, the claimants maintained the defendant was under an ongoing duty to calculate the equalisation date correctly and administer the scheme on the correct basis going forward. The claimants pointed to specific instances after 15 December 2002 where the defendant had adopted the incorrect equalisation date, including in actuarial reports.

The defendant submitted (among other things) that the 15 year period started running from the date of its advice in connection with the 2002 deed and therefore the claim was time barred. It also argued that there was insufficient evidence of concealment to allow the claimants to rely on section 32 of the Limitation Act 1980.

The decision

Perhaps surprisingly, the judge held that there was a realistic prospect of the claimants showing that the defendant’s liability in respect of equalisation extended to the end of the retainer and was not limited to its original advice in connection with the 2002 deed. If the claimants’ argument did succeed at trial it would mean the limitation defence would fail. The defendant’s application to strike out the claim was therefore refused.

What practical advice arises?

The decision leaves open the potential for the court to find that pension administrators/advisers may be under a continuing duty to correct earlier advice, significantly extending the scope of professional negligence claims. This is particularly concerning in the context of equalisation claims, given the industry is finally beginning to see such claims tailing off for limitation reasons. Having said that, the decision concerns an interim strike out application and so we will have to watch this space for any final decision. Safe to say, if the trial judge accepts there is an ongoing duty then it could have far reaching repercussions for pensions advisers and the industry generally, especially given the longevity of tenure of many pension scheme advisers.

How we can help

Gwendoline Davies, Ruth Bamforth, Louise Norbury-Robinson and Kathryn Vickers are specialists in all types of pensions litigation. They have significant experience of advising on pension equalisation issues including whether a scheme has been validly equalised and claims against advisers where it has not.

Gwendoline, Ruth, Louise and Kathryn regularly act for trustees, employers and administrators in connection with such issues, so if you have any queries or concerns arising from the outcome of the application in the James Cropper case or more generally, please contact Gwendoline, Ruth, Louise or Kathryn, who will be very happy to help.

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[1] (1) James Cropper plc (2) Entrust Pension Limited (as trustee of the James Cropper plc Pension Scheme) v Aviva Life and Pensions UK Limited, 2022 EWHC 1689 (Ch)

[2] [1991] QB 344