Pensions ruling means that schemes avoid prospect of being unravelled, says expert

The ruling should give pension fund administrators peace of mind about how courts will treat governing documentation when some documentation has gone missing.

The Court of Session rejected a claim that a 67-year old pension fund should not be able to demand contributions from employers because some records of amendments to the fund could not be found. If the Court had ruled the other way then many pension funds would be at risk.

The Scottish Solicitors Staff Pension Fund has operated since 1947 and over that time the documents governing its operation have been amended several times. Law firm Pattison & Sim was one of the employers using the fund. The firm claimed that the scheme was not operating correctly because amendments to those documents were not made properly.

The Court rejected that claim. It said that the deeds themselves declared that they had been properly amended. "I see no reason to peer behind those clear words," said the judge, Lord Woolman. "To my mind [Pattison & Sim's] approach is unduly technical and legalistic."

If the Court had taken the opposite approach then many pension funds could have been challenged and unwound. It would be a rare scheme that lasted for many decades and was able to produce exact paperwork to vouch every process and decision made over all that time.

Instead the Court has said that anyone who wants to challenge the scheme needs to do more than just claim that some processes weren't carried out properly. They would need to produce evidence to support the assertion that proper procedures had not been followed. This puts a greater onus on the person making the challenge.

The practical difficulties of unwinding a long-running scheme such as this one would make it a near-impossible task. The Court said that it would be "impossible to unwind all the contributions and payments that have been made over the years". The Court has set the bar high for any challenge seeking that outcome.

This ruling in this case is in line with the approach taken in previous cases in Scotland, and is in contrast to the approach sometimes taken in England.

The judgment avoids creating a major commercial problem and will give comfort to those administering pension schemes in Scotland with its practical and helpful approach to the realities of pension administration.

A team from Pinsent Masons, the law firm behind Out-Law.com, led by Craig Connal QC and Ian Gordon acted for the trustees of the Scottish Solicitors Staff Pension Fund in this case.