Supreme Court slaps down DWP's employee pensions case

The Supreme Court has dismissed the Department for Work and Pensions' appeal in the long running Bridge v Yates case.

Judges dismissed the appeal by a majority of four to one to uphold a Court of Appeal decision concerning the Imperial Home Decor scheme, and a previous decision.

A DWP statement said the judgment will result in some schemes being regarded as providing money purchase benefits under current legislation, even if it is possible for funding deficits to arise in respect of those benefits.

"This will place some schemes outside the scope of a wide range of legislation, including that governing scheme funding, employer debt, the Pension Protection Fund and the Financial Assistance Scheme," it said.

"Workers who hitherto thought their rights were protected have been put in doubt by a ruling of the Supreme Court. In the circumstances, the government intends to ensure these rights are clarified through retrospective legislation."

The DWP now plans to introduce retrospective legislation to protect  scheme members' benefits. It is also also considering transitional protection.

Bridge Trustees chairman Giles Orton said: "The majority judgment, delivered by Lord Walker was "admirable", and goes further than the Court of Appeal in attempting to define money purchase benefits.

"However, the court still faced the problem that the underlying legislation that it had to interpret is poorly drafted.

"It is to be hoped that the DWP will go back to the drawing board and endeavour to tidy up the definition, at the same time as ensuring that where money purchase schemes can get into deficit, the scheme protection legislation, including the Pensions Protection Fund, will apply," he said.

The case - funded by the DWP - was heard at a two day hearing in June.