We thought this was a case where a trust could be held to what they said to a scheme member.  The Ombudsman and a High Court judge agreed, but the Court of Appeal did not.

One factor the IBM retiree complainants were seeking to clarify in their 1999-2004 complaints was:

"Whether a company can do and say whatever it likes when it wants to recruit, retain or retire employees and then do something different subsequently."

The Pensions Ombudsman said that this was not a question for him to answer, but that in the particular IBM case what the company said was not legally enforceable.  He also chose not to examine the amount of the gap between what was promised and what was delivered, from which the inference can be drawn that he was of the opinion that the same lack of enforcement would apply what the gap was. 

The short story of Steria v Hutchison is that Mr Hutchison took the view, because of what he was told, that his Normal Retirement Age should be treated as 62, even though the deeds said it was 65.  The Ombudsman agreed with him and so did the High Court.  The judgement had effect not only for Mr Hutchison but also for others like him, so the company had to provide about £4m to fund such retirements.

The High Court decision is not an easy read.  It notes (paragraph 43) that the Ombudsman did not give his reasoning in a legal framework. (The Ombudsman said "It would not now be fair to take away the benefits that Mr Hutchison reasonably believed he was accruing as he continued to work for Bull [which became Steria] over the past decade". )  Mr Justice Peter Smith puts the legal basis in terms of estoppel by representation and estoppel by convention.

Estoppel prevents a party making an assertion (in this case what the deeds said) when they have previously made a contradictory assertion (in this case what the handbook said).  Estoppel by representation occurs when facts are stated explicitly.  Estoppel by convention arises when two parties have agreed something under shared assumptions, whether or not the assumptions were stated or sound, see other estoppels.

Reflecting back to the 1999-2004 IBM complaints, the obvious question is why, in view of the above statement about fairness to Mr Hutchison, the Ombudsman thought it was fair to not deliver benefits in inflation protection that members reasonably believed they were accruing (when in fact the trust&company stated aim was not the actual aim and the inflation protection was decided by Corporate Instructions.)  Since (as with Hutchison) the Ombudsman gave no legal reasoning for his opinions there may be grounds for thinking that if the IBM complainants had been able to take their case to the High Court (which they could not, for financial reasons), the High Court would have resolved in the direction that it did for Hutchison, and IBMers would have benefited.

It is significant that it was not the responsibility of the scheme member to find out that what he was being told was not confirmed by the deeds; Mr Hutchison won his case although - "It is true that if Mr Hutchison exercised his right to see the Trust Deed he would have seen that the statements in the 1994 letter and the successive booklets were wrong and badly so."

It is interesting that the trustee appealed the determination but the company did not.  Was this just a cock-up by their legal advisers (see paragraph 14 of the judgement) or did the company think it was the honourable course to deliver what they said they would?   

So there is still confusion over "Whether a company can do and say whatever it likes when it wants to recruit, retain or retire employees and then do something different subsequently."  The answer in practice seems to be "it depends on what the Ombudsman regards as fair".  Whether that is an appropriate power for the Ombudsman to have, and whether he has applied it properly and consistently, is something you can judge.

Complaints are often about the difference between what some individual was led to believe and what the deeds cover.  The practical implication of Hutchison is that when the company/trust implicitly says "Forget about what we told you, it doesn't count unless it is in the Deeds" , the complainant does not have to give up.