High Court approves merger of schemes in winding-up

The High Court has approved the merger of the Staff and Executive Schemes both of which were in winding-up after the principal employer went into administration and then into liquidation. In Arcadia Group Pension Trust Ltd v Smith [2025], the Court’s approval was sought due to the proposed exercise of the amendment power of the Staff Scheme during the winding-up. 

The case arose because the trustee wished to amend the Staff Scheme rules to enable it to accept a bulk transfer-in of the Executive Scheme beneficiaries, assets and liabilities. The proposal would have been uncontroversial but for the fact that both schemes were in winding-up and the employer was in liquidation. 

The amendment power in the Staff Scheme expressly provided that it continued until the scheme had been wound up and that it could be exercised by the trustee without the need for principal employer consent where the employer was in liquidation. The Court held that the amendment power in the Staff Scheme was sufficiently wide to enable it to be exercised to permit a merger with the Executive Scheme during the winding-up process. There was no scope to imply any fetter on the use of its operation by the trustees alone when the scheme was in winding-up. 

The Master was also satisfied that the merger was a proper exercise of the power, even though adding members of the Executive Scheme to the Staff Scheme would enable the members of the former scheme to benefit from the surplus in the latter scheme.