Amendment power: Court of Appeal ruling in BBC case

The Court of Appeal has dismissed an appeal as to the scope of the BBC Pension Scheme's amendment power.

The amendment power included a proviso whereby amendments which affected the interests of active members could be made only if specified conditions were met.

Upholding the High Court's ruling, the Court of Appeal said that "interests", for this purpose, included not just benefits earned by past service, but also:

• the link between past service benefits and final pension salary; and
• the ability to accrue benefits for future service.

As regards the salary link, the Court acknowledged a wrinkle. For certain members, the BBC had power under the Scheme's rules to determine what counted towards pensionable salary. In the 2017 Bradbury case, the Court of Appeal held that the BBC could use that power to decide what part (if any) of a pay rise would be pensionable. In this latest judgment, the Court said that, for relevant members, the interests protected by the proviso were qualified accordingly. So the salary link was subject to the BBC's power to determine, in accordance with Bradbury, what counted for pension purposes.

Some commentators had hoped that the Court might take the opportunity to reconsider established principles as to the interpretation of amendment powers. They will be disappointed. The Court endorsed the textbook approach: when interpreting pension scheme rules, the focus should be on "the words which the drafter has chosen to use". The Court would attach less weight to the factual background than it might do in other, non-pensions, contexts.

The judgment will also disappoint those who had hoped that the Court might revisit the long line of cases, starting with Courage, in which provisos referring to "accrued rights" or "benefits already secured" have been held to cover salary links. The Court declined to be drawn: "It is not plausible to suggest that Bradbury casts any doubt on Courage in that respect. Nor do the grounds of appeal in this case independently suggest that Courage and the cases which followed it were wrong."