Legal In response, the trustee of the RPS
ruled Mr Stodart’s position as a protected person was separate to his indefeasible rights. By choosing to terminate his service with Connex and to take employment with Thameslink, Mr Stodart had terminated his continuous service and so his right to protected person status. Further, the trustee went on to confirm it had a duty to operate the scheme in line with governing legislation only, and could not allow any parliamentary discussions that had not found their way into legislation to override statute. Though Mr Stodart ended his
‘protected persons’ protection voluntarily in 1997, by joining another employer in the RPS his ‘indefeasible right’ to continue participating in the scheme remained unchanged. On appeal, the trustee’s decision was
upheld at both stage one and two of the internal dispute resolution procedure, and Mr Stodart took his complaint to the Office of the Pensions Ombudsman. Determining the complaint, the
Deputy Pensions Ombudsman, upheld the trustee’s finding that by leaving Connex, Mr Stodart had voluntarily broken his continuous service by moving to an employer not connected with Connex. It is important to note that the
Ombudsman’s determinations are not precedent, and it is always possible that this determination will be appealed to the High Court. However, the determination is a welcome clarification of the distinction between the ‘protected persons’ requirements and the ‘indefeasible rights’ provisions and could have implications for all participating employers in the railway industry sector. The High Court case involving Urenco
looked at the position of 'protected persons' in the energy sector, but the findings may still be very much applicable to the rail industry.
The Urenco case Urenco proposed that it would change its pension scheme to either require increased contributions from active members in order for them to retain the existing benefit structure or, if the active members wanted to continue to pay contributions at the current rate, accept a lower benefit structure. Justice Warren heard the case, interpreting the Energy Act 2004 very narrowly and determining that 'protection' meant exactly what it said – members’ benefits and contribution levels are protected so the Principal Employer – Urenco – could not make the changes
proposed, in the manner it intended. Although the Energy Act 2004 and
the Railways Act 1993 both provide for ‘protected persons’ they contain differently worded provisions and each statutory protection will be assessed on its own merits. However, Justice Warren has set in place a principle that, where Parliament has sought to enshrine protections in statute, employers will not be able to circumvent those protections by relying solely on the powers contained in a pension scheme’s governing provisions.
Clarity at last? Taken together, the Stodart determination and the Urenco case provide strong evidence that the authorities are beginning to clarify who is and who is not a protected person and, possibly more importantly, what protection those protected persons actually benefit from. While we will have to watch this space for a High Court case of this nature involving the rail industry, it can be presumed that any decision is likely to be similar to those of the Stodart and Urenco cases.
John Hanratty is regional head of pensions at business law firm DWF
www.dwf.co.uk
Efficient railway verge clearing
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