Hogan Lovells

Key Dates

Safeway Ltd v Newton, Safeway Pension Trustees Ltd C-171/18.

Judgment date 7 October 2019.

 


Summary

The Court of Justice of the European Union (CJEU) has ruled that EU law prevents retrospective equalisation of normal retirement ages (NRAs) between men and women at the higher male NRA of 65 in respect of service during the "Barber window" (from the date of the Barber decision – 17 May 1990 – to the date when effective measures were taken to level down), even where this would be allowed under the scheme rules and national law.

Background

An announcement and a letter in 1991 both announced the introduction of an equal normal pension age (NPA) of 65 for men and women with effect from 1 December 1991. Formal recognition in the scheme documentation of the common NPA was in a deed dated 2 May 1996.

Unlike in previous ECJ cases (in particular, Smith v Avdel), the scheme rules permitted retrospective amendments.  Clause 19, the scheme amendment power, provided that amendments had to be by deed and that amendments could take effect from the date of any prior written announcement or a date occurring at any reasonable time previous to the date of the amending deed.

The 1996 changes were made before s67 of the Pensions Act 1995 came into force in April 1997, and so UK law would also have permitted retrospective levelling down.

High Court decision

The High Court rejected the employer's claim for a declaration confirming that normal pension age had been equalised at age 65 with effect from 1 December 1991, the date it was announced to members. The 1991 notices did not amount to amendment within clause 19. Exercise of the amendment power required a deed, so an effective alteration was only made by the 1996 Deed. Under the principle of EU law against retrospective levelling down to comply with the Barber decision, the NPA for men and women in relation to service between 1 December 1991 and 2 May 1996 was age 60.

Court of Appeal decision

The Court of Appeal upheld the High Court's decision that the power of amendment could only be exercised by deed, and not by written announcement. The language of clause 19 was plain and defined the single mode of amendment by deed.
In relation to retrospectivity, the employer argued that the advantaged sex (women) only ever had a "defeasible" right to NRA of 60 as it could be amended retrospectively under the scheme rules and national law.  Giving men an absolute right to NRA60 for the Barber window period would mean granting them a higher benefit than their female comparators.

The Court of Appeal found that the position under EU law was unclear. The question of whether Smith v Avdel established a principle that retrospective levelling down could not take place during the period when the Barber window remained open, where there was a clear power for the employer and/or trustee under domestic law to level down with effect on past pensionable service, was referred to the CJEU.

CJEU judgment

The CJEU found that EU law prevented the retrospective levelling down of NPA to 65 during the Barber window, notwithstanding that it would have been permitted by UK law and the scheme rules.

In reaching this conclusion, the CJEU held that it was settled case law that as a general rule the principle of legal certainty precludes a measure implementing EU law from having retroactive effect. 

However, the CJEU found that the general rule precluding retroactive equalisation could exceptionally be otherwise where there was an overriding reason in the public interest and where the legitimate expectations of those concerned are duly respected.  It was also settled case law that the risk of seriously undermining the financial balance of the pension scheme concerned may constitute such an overriding reason in the public interest.

As regards the Safeway scheme, the file before the CJEU did not include information to enable it to conclude that retrospective amendment to NRAs would be warranted by an overriding reason in the public interest, so it seemed to the Court there was no objective justification for it.  However, it is for the national court to decide whether this is the case.



Date Accessed: 28/05/2022