Insurer able to change the basis on which it granted discretionary increases to pensions
Prudential has won a case at the High Court brought by the trustees of its own employees’ retirement fund, reports the FT.
A judge has ruled that Prudential was able to change the basis on which discretionary increases to pensions were granted to members of its final salary pension scheme.
The case centres on Prudential’s decision in 2005 to increase payments to members in line with Retail Price Index (RPI) but to cap the annual increase at 2.5 per cent.
Prudential had previously awarded increases to members on a more generous basis using uncapped RPI – which currently stands at 5.3 per cent.
According to the FT, it was accepted by all the parties that these increases were discretionary.
Member of the pension scheme argued that because pension increases had been uncapped for decades, that this prevented Prudential from changing its policy.
Mr Justice Newey found in his ruling: “I can well understand that members of the [defined benefit section] will have been disappointed by the 2005 decision. I can also see that they may feel themselves to have been treated unfairly by Prudential.
“However, the rules give Prudential a discretion with regard to pension increases which is not subject to any express restriction.”
