When applying uniform accrual to “so much of any benefit” by virtue of section 74(3) of the Pension Schemes Act 1993 one was being directed not merely to what one might call the top slice, the benefit which actually accrued at the higher rate, but that element of a benefit package which was the subject of the higher rate. In section 74(3) the “benefit” referred to was the composite of the various benefits which made up long service benefit and if the exception applied it did with regard to the entirety of such a component.

Asplin J so held in the Chancery Division when deciding a preliminary issues in favour of the claimant.

The claimant was the sponsoring employer of a defined benefit, revenue registered (formerly Inland Revenue exempt approved) occupational pension scheme. The first to seventh defendants were the current trustees and the eighth defendant was a member of the scheme. The claimant sought rectification of the deed and rules of the scheme. The eighth defendant raised the issue that were the proposed application for rectification successful, the scheme would not be compliant with statutory preservation requirements for occupational pension schemes, contained in the Pension Schemes Act 1993 and the relevant regulations. This judgment followed the trial of the agreed preliminary issues concerning the preservation requirements and their application to the scheme.

Section 74(1) of the Pension Schemes Act 1993 provides: “(1) Subject to the provisions of this section, a scheme must provide for short service benefit to be computed on the same basis as long service benefit.”

Section 74(3) of the 1993 Act provides: “Subsection (1) does not apply to so much of any benefit as accrues at a higher rate, or otherwise more favourably, in the case— (a) of members with a period of pensionable service of some specified minimum length, or (b) of members remaining in pensionable service up to some specified minimum age.”

ASPLIN J said that the purpose of the exceptions to the general rule in section 74(1) of the 1993 Act, contained in section 74(3) of the 1993 Act was to protect the scheme member from the prejudice he would otherwise suffer. When applying uniform accrual to “so much of any benefit” by virtue of section 74(3) one was being directed not merely to what one might call the top slice, the benefit which actually accrued at the higher rate, but that element of a benefit package which was the subject of the higher rate. In section 74(3) the “benefit” referred to was the composite of the various benefits which made up long service benefit and if the exception applied it did so with regard to the entirety of such a component. Accordingly, the scheme did not contravene section 74.