When is a rule not a rule?

A recent decision in the High Court of Northern Ireland has highlighted once more that Pension scheme rules can quickly be overtaken by the ever changing legislative landscape and that just because the scheme rules say one thing doesn’t always mean that it is right.

The case concerned the payment of death benefits to an unmarried partner. The rules said that the unmarried partner must be nominated in writing by the member and certain other conditions had to be met including the fact that they had lived together for at least two years and were financially dependent on each other.

The last two points were met but the member had not nominated the unmarried partner before he died. The trustees refused to pay the survivors pension and the High Court held that the Trustees had discriminated against the partner on the basis of her unmarried status. The court ruled that it was irrational and disproportionate to impose a written nomination requirement.

It remains to be seen if this judgement will be appealed or whether it will have greater impact where death benefits differ depending on marital status. Whilst current feeling is that the judgement is unlikely to have a wider impact it does serve as a reminder as to how complex the pensions world can be and that even when a rule is in place it does not necessarily mean that it can always be relied upon.

It perhaps also highlights the importance of constantly reviewing scheme rules and that Trustees need to consider all the circumstances of each case and take legal advice as appropriate.