In the recent judgment in the case of Merchant Navy Pension Fund Trustees Ltd v Stena Line Ltd, the court has held that members who have ceased accruing additional years of pensionable service due to the closure of a scheme are not in "pensionable service" for the purposes of the Pensions Act 1995 and so are not active members.


This is the case even if their accrued benefits are revalued more generously than would otherwise be the case due to the members' continued employment with a scheme employer.

The question of what constitutes an "active member" for the purposes of the legislation is highly significant because under the statutory "debt on the employer" regime provided for by section 75 of the Pensions Act 1995, an employer ceasing to employ active members can trigger a debt on that employer. There has been legal uncertainty over whether members are "active members" if they are no longer accruing additional years of pensionable service due to a scheme's closure, but still have their benefits uplifted by reference to salary increases whilst they remain in employment. Although the facts of the Merchant Navy case were slightly different, with members entitled to a better rate of revaluation (not a pensionable salary uplift) while they remained in employment, most of the judge's reasons for reaching the conclusion she did apply equally to the scenario of a pensionable salary uplift. The judgment therefore brings welcome clarity to what had previously been widely viewed as a legal grey area.

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Rachel Rawnsley

Rachel Rawnsley

Partner, Head of Pensions
United Kingdom

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Jade Murray

Jade Murray

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United Kingdom

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Catherine McAllister

Catherine McAllister

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United Kingdom

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Rachel Uttley

Rachel Uttley

Partner, Pensions
United Kingdom

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