Board of the Pension Protection Fund v Dalriada Trustees Ltd

Board of the Pension Protection Fund v Dalriada Trustees Ltd

A company with directors eligible for scheme membership, whether remunerated or not, qualifies as an 'employer' for fraud compensation purposes under section 182 PA 2004. Employer’s pension liabilities include all legal obligations to fund member benefits, regardless of source. Scheme failure notices can be issued even if no such liabilities exist. Losses attributable to prescribed offences include direct and consequential costs and tax liabilities. A sham scheme can only become genuine upon appointment of an independent trustee without shamming intent, not by member transfers. Compensation is only payable for losses incurred while the scheme was an occupational pension scheme.

Parties
Claimant: The Board of the Pension Protection Fund; Defendant: Dalriada Trustees Limited; Interested Party: Secretary of State for Work and Pensions
Jurisdiction
England and Wales
Judgment Date
06 November 2020
Procedural Posture
Civil (pensions/fraud Compensation) / Judgment After Trial
Outcome
Declaratory judgment issued; questions of statutory interpretation answered.
Legal Topics
Fraud Compensation Fund, Occupational Pension Schemes, Employer Definition, Sham Trusts, Scheme Failure Notice, Statutory Liabilities, Attribution of Loss, Trustee Appointments
Pensions Law Trusts Law Statutory Interpretation Fraud Compensation Fund Occupational Pension Schemes Employer Definition Sham Trusts Scheme Failure Notice +3 more

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Parties

The Board of the Pension Protection Fund

Claimant

Dalriada Trustees Limited

Defendant

Secretary of State for Work and Pensions

Interested Party

Procedural Posture

Civil (pensions/fraud Compensation) / Judgment After Trial

Legal Issues

  1. 1 Who qualifies as an 'employer' for the purposes of section 182 of the Pensions Act 2004 and the Fraud Compensation Regulations?
  2. 2 What constitutes 'employer’s pension liabilities under the scheme'?
  3. 3 Can a scheme failure notice be issued if there are no employer’s pension liabilities?

Ratio Decidendi

A company with directors eligible for scheme membership, whether remunerated or not, qualifies as an 'employer' for fraud compensation purposes under section 182 PA 2004. Employer’s pension liabilities include all legal obligations to fund member benefits, regardless of source. Scheme failure notices can be issued even if no such liabilities exist. Losses attributable to prescribed offences include direct and consequential costs and tax liabilities. A sham scheme can only become genuine upon appointment of an independent trustee without shamming intent, not by member transfers. Compensation is only payable for losses incurred while the scheme was an occupational pension scheme.

Court Disposition

Declaratory judgment issued; questions of statutory interpretation answered.

Orders

  • Declaration that a company with directors eligible for scheme membership, whether remunerated or not, is an 'employer' for section 182 PA 2004.
  • Declaration that employer’s pension liabilities include all legal liabilities to fund member benefits, including statutory and trustee expenses.