Unfunded schemes and preservation

United Kingdom

Last year the Pensions Ombudsman determined that the preservation requirements applied to unfunded schemes.

The High Court has now overturned this determination in the case of Royal Masonic Hospital v Pensions Ombudsman.

Rimer J held that the preservation requirements in sections 69-82 of the Pension Schemes Act 1993 only applied to those occupational pension schemes to which, in pursuance of a legal obligation, the employer has made, or is obliged to make, payments out of which benefits were payable. The language of the relevant legislation was unambiguous and did not apply to unfounded schemes.