Claim against pension scheme administrators for equalisation error was time-barred, court rules

Chief Master Marsh upheld the administrator's application for dismissal of the claim, which had been brought by the trustees of the Jon Earnshaw & Bros Limited Staff Pension Scheme. The case appears to be the first in which a court has found a so-called 'Barber claim' to be time-barred, according to pension consultants LCP.

"Rarely do we see equalisation claims before the court, but this case demonstrates two important points," said pensions litigation expert Hayley Goldstone of Pinsent Masons, the law firm behind Out-Law.com. "Firstly, it's imperative to consider whether the equalisation error could have been realistically spotted; and secondly, for many equalisation errors, the claims are time barred and this must be checked as a priority."

DB pension schemes have been legally required to provide equal benefits to male and female scheme members since the Barber ruling by the Court of Justice of the European Union (CJEU). Among a number of claims brought against the scheme administrator, the Earnshaw trustees said that it had equalised benefits with effect from 7 November 1990, the date of the Barber judgment, when it fact the correct date was 31 December 1994.

The judge allowed summary judgment on this point, finding that the trustees had "no real prospect of success … and there is no compelling reason why the issue should be disposed of at trial".

"[The administrator's] objection to the equalisation claim is that if it made errors, they were committed in the period between 1990 and 1996 during which period two announcements were issued (1991 and 1993), the 1994 [scheme] rules were drafted with a further rule amendment in 1996," he said. "The claims, it is said, are time barred as they occurred outside the fifteen year longstop period and do not constitute a continuing breach."

"The position here is different to the allegation that pension payments should have been reviewed from time to time for error. The complaint about equalisation was not one which realistically could have been spotted on a review given that it arose from an error embedded into the scheme by virtue of rule changes," the judge said.

The trustees had argued that, by equalising benefits early, female members of the scheme had lost out on payments that they were owed.

The administrator, Prudential, provided administrative services between 1956 and 2012. It also provided actuarial services to the scheme until 2002.

The trustees made a number of other claims against the administrator, which it alleged had not made the necessary deductions from the benefits of scheme members who had taken early retirement as well as various other computational errors. The court heard that the early retirement claim alone was now worth around £420,000 plus interest.

However, the judge agreed with Prudential that the payments made to the members who had retired early were in accordance with the scheme rules.