High Court finds "state pension age" in bridging pension rule refers to age 65 and not subsequently increased state pension ages

The High Court has allowed an appeal by the trustee of a DB pension scheme against a decision of the Pensions Ombudsman which had upheld a complaint that the respondent was entitled to a bridging pension until age 66.

This judgment makes clear that, on the wording of the scheme rules, state pension age is static and not dynamic, so increases to state pension age do not mean that the bridging  pension needs to be paid to the higher age.

The scheme rule in question provided for a bridging pension that would cease at "State pension age", which was defined by reference to "the rules in paragraph 1 of Part I of Schedule 4 to the Pensions Act 1995 (rules for equalisation of pensionable ages for men and women)".

The trustee argued that this reference was "static", meaning it referred to the legislation as originally enacted in 1995, under which the respondent's state pension age was 65. The respondent contended it was "dynamic", encompassing subsequent legislative amendments which had increased her actual state pension age to 66. The Ombudsman had agreed with the dynamic interpretation.

The judge held that the proper construction of the relevant rule was static. He observed that where a contract or deed incorporated provisions of a statute, there was no presumption either way as to whether the reference was to the law for the time being in force. Instead, the issue should be determined by the proper construction of the words in their context.

On this basis, the judge found significant that the rule described the legislative reference as being "for equalisation of pensionable ages for men and women", indicating it was not intended to encompass future changes relating to increases in state pension age generally. When the scheme rules were introduced, there was nothing in the statutory context to suggest increases to state pension age were anticipated.

The judge allowed the appeal and set aside the Ombudsman's determination, finding that the respondent's state pension age for the purpose of the bridging pensions rule was 65, not 66.

However, this decision was reached by interpreting the specific scheme rules. It is possible that differently formulated rules may not be construed in the same way.