One of Newell Rubbermaid UK’s predecessors, the Parker Pen Group, did not discriminate against younger members when it moved under-40s out of its final salary scheme, the High Court has ruled, as the issue happened in 1992 and the company took actuarial advice. The judge even said pursuing the claim after 30 years was “somewhat opportunistic”. 

 

To improve the employer’s balance sheet ahead of being bought, the Parker Pension Plan, a final salary scheme that preceded the Newell scheme, was changed in 1992 by moving all members under 40 into a defined contribution arrangement. Those aged 40-44 were given a choice of whether to stay in the final salary scheme, while members aged 45 and over stayed in final salary by default. The new DC section was introduced by amending the deed. 

 

 

Age discrimination only became unlawful in the UK in 2006, yet the scheme changes were recently challenged in Newell Trustees Ltd v Newell Rubbermaid UK Services Ltd and Ian Lawrence Putland. Mr Putland, a scheme member, argued that the current basis of the administration would mean that the trustee will be obliged to pay benefits under the scheme that are less favourable to the under-40s than the over-40s.  

 

However, Mr Justice Green decided that “there was no age discrimination either in the rules of the scheme itself or in the way that the trustee is bound to act” at the point when it starts paying benefits to members.  

 

“The decision was taken in 1991/2 to split the members into groups on the grounds of their age. There is no further decision for the trustee to take in relation to the section of the scheme that each member should be in,” he said. 

 

This differentiates the case from Walker v Innospec from 2017, he argued, which the claimant had pointed to. In that case, the Supreme Court overruled time-based legal exemptions that allowed schemes to treat same-sex couples differently for spouse’s pensions, with Lord Kerr saying: “The point of unequal treatment occurs at the time that the pension falls to be paid.”   

 

Justice Green said Newell is different from Walker v Innospec because in the latter, the Supreme Court came to its conclusion "only because the company, and presumably the trustees had already decided they were not going to pay the spouse's pension, albeit that this was on the basis of the temporal limitation provisions. That decision was made after that form of discrimination had become unlawful.” 

 

 

In the Newell case, Justice Green also considered how the company came to its decision and found that the employer was motivated by a desire for fairness, notwithstanding the fact it was making the changes for commercial reasons. 

 

“While [Parker Pen UK]’s overall motive for effecting the changes was to improve its balance sheet, I believe that it sought to achieve that while continuing to provide comparable benefits to all members irrespective of age. The transitional arrangements were the means, as it seemed at the time, of ensuring that those comparable benefits would be paid. I find it difficult to see what other purpose the transitional arrangements could have,” he wrote in his judgment.  

 

“It took all necessary professional advice, both legal and actuarial, and the method adopted was approved by all concerned, including the then trustees,” he added. 

 

Although the judge said he sympathised with those left worse off by the transfer, he found the claim was “somewhat opportunistic” as it was brought after 30 years, as well as criticising its focus. It should have concentrated on “the more realistic issues”, such as a proviso in the scheme rules around benefit changes, he suggested, even though he also found that the scheme changes did not breach this proviso. 

 

 

The fact the company took professional advice - including from actuaries to decide where to draw the line on age - “seems to have been a key factor” in persuading the court that the employer’s method was proportionate, says Tom McNaughton, of counsel at Baker McKenzie. 

 

However, this does not mean that arguments around transitional arrangements will always work, he adds. 

 

In the McCloud case, where younger public sector workers were moved to a career average scheme in 2015 while older workers stayed in final salary, it did not, for example. 

 

“The Court of Appeal decided that there was no legitimate aim and the aims advanced by the government were not supported by any evidence as to the reasons underlying the aims,” remarks McNaughton. “So each case will need to be considered on its facts.”