Dutton v FDR Ltd
Monday 3 April 2017
The Court of Appeal has handed down judgment in the case of Dutton & ors v FDR Ltd  EWCA Civ 200. This case concerned how an underpin should operate in relation to increases to pensions in payment for an occupational pension scheme. The underpin was required as a result of a deed of amendment executed by the trustees of the scheme in 1991. The amendment changed the rate at which pensions in payment were to be increased from 3% p.a. to 5%LPI p.a. This amendment purported to apply both to future pensionable service and past pensionable service. In relation to past pensionable service, however, the deed of amendment contravened the limitations to the trustees’ power of amendment. The question for the Court of Appeal was whether the underpin should operate annually or cumulatively. An annual underpin would increase the liabilities of the scheme by considerably more than a cumulative underpin. The Court of Appeal held that a cumulative underpin should apply.