Changing Pension Arrangements - Extrinsic Contracts
- The employer and members of a scheme can contractually agree that the member's entitlement under the scheme will be different to that under the scheme rules
- The case of South West Trains v Wightman established that such "extrinsic contracts" could be effective
- Extrinsic contracts cannot affect benefits which it is agreed have been earned by members' employment before the extrinsic contract is concluded, because of section 91 of the Pensions Act 1995
- Extrinsic contracts can be useful for employers looking to make changes to future pension benefits but they should always be used with care and only after taking legal advice
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