Update On High Court Ill Health Benefits Case
IHER Settlement Approval Hearing Postponed To The Week Of 21 February 2022
As part of a routine exercise to ensure that the benefits being paid in practice are in line with both the Fund’s current and historic trust deed and rules (which are the formal documents governing the Fund and set out the benefits), the Trustee has identified some potential areas of misalignment. Two particular issues identified could result in potentially very material additional liabilities for the Fund. Further details about this are provided below.
The Trustee is liaising over these issues with the representative beneficiaries’ and employers’ advisers in the case about ill health early retirement (“IHER”) benefits. However, in order to allow those parties to the IHER case sufficient time to consider fully the impact of these issues on the settlement, the hearing to consider approval of the settlement will now need to be postponed.
The hearing was due to take place remotely in the week of 22 November 2021. Because of the potential areas of misalignment, the Court has agreed to postpone the hearing to consider approval of the settlement until the week of 21 February 2022. This is the earliest new date that could be obtained in the circumstances.
The Trustee appreciates that this further postponement of the hearing to consider approval of the settlement is very disappointing to the members affected by the settlement. All parties are working as fast possible to resolve the position.
If any member wishes to watch the High Court hearing remotely, please could they contact Mercer who will then pass on their details and their request to the High Court. Mercer’s contact details are set out at the end of this update.
The Identified Issues
The two issues referred to above concern a potential underpayment of benefits to members.
Although members are receiving in practice what the Trustee believes was intended in relation to these two issues, the historic rules of the Fund do not fully reflect that. The historic rules provide for additional unintended benefits in relation to:
the rate of revaluation on Guaranteed Minimum Pensions (GMPs) accrued between 6 April 1988 and 3 October 1994; and
the rate at which pensions accrued between 1 February 1998 and 1 June 2000.
The potential amounts that could be involved are very significant and are still being investigated.
These are not issues which were to be decided in the Court case. They may affect members across the Fund as well as certain members affected by the IHER Court case.
The Trustee is also investigating a number of other potential issues and is placing the highest level of priority and urgency on this process. This further review process is complex and will take time; the Trustee will provide updates in due course if any additional issues are identified which are likely to be significant to the finances of the Fund.
What Does This Mean For You
There is nothing that you need to do
As noted above, the Trustee believes that if you are receiving a pension, you are already receiving the intended benefits in relation to these two issues. If as a result of these two issues, additional benefits are due, they will be paid by the Fund.
You have recently been sent the 2021 member newsletter which includes a Summary Funding Statement. This notes that as at 31 March 2021 the Fund was 96% funded and shows that the Fund was well funded before allowing for the two new issues which have been identified.
To the extent the new issues result in additional liabilities for the Fund, the Trustee will need to ensure that the additional benefits will be funded through investment returns and/or additional contributions collected from the employers in the usual way. At the current time the Trustee fully expects that the Fund will be able to pay all of the benefits as they fall due given the covenant from Fund employers.
Additional Independent Trustee Directors
Melanie Cusack and Lionel Sampson, two new independent trustee directors, were appointed to the Trustee board on 25 October 2021. The added experience and assistance that they bring to the board is very welcome. They are now fully involved as part of the board in dealing with these new issues.
Documents For The IHER Case
As we have said several times before, in relation to the IHER case, the key thing that you need to do now, if you are not in receipt of an IHER pension but think you might be affected by the IHER case, is keep safe any relevant records that you have.
In summary, the Trustee strongly recommends that, where possible, if you were in service on 8 October 1993 (even if you were in between ships on that date), you retain any medical and employment history and/or details about your past health. This is particularly around the time of leaving Merchant Navy service as a rating. If you are incapable of doing so or are the survivor of a member who was in service on 8 October 1993, the Trustee recommends that the family/survivors/estates of the member retain any relevant details and/or records.
If you would like more information about the proposed settlement, you can call our trained helpline agents on the freephone helpline below. This is a dedicated phone line for this case.
Helpline freephone number: 0800 197 6923
The helpline agents are only able to explain the proposed settlement in general terms. They are not able to provide any views or advice about the expected outcome in your particular case e.g. whether you will qualify and, if so, what compensation you might receive.
You can also write to us or email us at the address below. Again, we are not able to provide any views or advice about the expected outcome in your particular case.
Our address for enquiries by post is:
Merchant Navy Ratings Pension Fund
c/o Mercer Employee Benefits
Post Handling Centre U
St James’s Tower
7 Charlotte Street
Our email address for enquiries is: firstname.lastname@example.org