Easterly Ltd v Headway Plc [2008] EWHC 2573 (Ch) (30 October 2008)

Easterly Ltd v Headway Plc [2008] EWHC 2573 (Ch) (30 October 2008)

The trustee may effect a partial buy-out under Rule 12(j), discharging its liability to the extent of the annuity purchased on a benefit-for-benefit basis. After such a buy-out, the trustee retains the power to fix an 'applicable time' for section 75 purposes, and the section 75 debt is calculated by reference to the remaining unmatched liabilities. The partial buy-out route is not blocked by GMP obligations, but the trustee must ensure that the process provides worthwhile value for members by materially increasing the section 75 debt.

Citation
[2008] EWHC 2573 (Ch)
Parties
Claimant: Easterly Limited; Defendant: Headway PLC
Jurisdiction
England and Wales
Judgment Date
30 October 2008
Procedural Posture
Part 8 Claim (declaratory Relief) / High Court (chancery Division) Judgment
Outcome
Declarations granted with provisos
Legal Topics
Occupational Pension Scheme Winding Up, Section 75 Pensions Act 1995 Debt, Partial Buy Out of Pension Benefits, Trustee Powers and Duties, Guaranteed Minimum Pension (gmp), Minimum Funding Requirement (mfr)
Pensions Law Trusts Law Occupational Pension Scheme Winding Up Section 75 Pensions Act 1995 Debt Partial Buy Out of Pension Benefits Trustee Powers and Duties Guaranteed Minimum Pension (gmp) Minimum Funding Requirement (mfr)

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Parties

Easterly Limited

Claimant

Headway PLC

Defendant

Procedural Posture

Part 8 Claim (declaratory Relief) / High Court (chancery Division) Judgment

Legal Issues

  1. 1 Whether a partial buy-out by the trustee discharges liability on a benefit-for-benefit basis or by reference to the minimum funding requirement
  2. 2 Whether the trustee retains power to fix an 'applicable time' for section 75 purposes after a partial buy-out
  3. 3 Whether the partial buy-out route is blocked by the obligation to provide guaranteed minimum pensions

Ratio Decidendi

The trustee may effect a partial buy-out under Rule 12(j), discharging its liability to the extent of the annuity purchased on a benefit-for-benefit basis. After such a buy-out, the trustee retains the power to fix an 'applicable time' for section 75 purposes, and the section 75 debt is calculated by reference to the remaining unmatched liabilities. The partial buy-out route is not blocked by GMP obligations, but the trustee must ensure that the process provides worthwhile value for members by materially increasing the section 75 debt.

Court Disposition

Declarations granted with provisos

Orders

  • Declaration that the trustee may effect a partial buy-out and thereafter fix an applicable time for section 75 purposes, with the section 75 debt calculated by reference to remaining liabilities, subject to the trustee being satisfied that the process provides worthwhile value for members by materially increasing...
  • Form of order to be agreed by counsel, including the rider regarding worthwhile value.