As every link in the chain of the economy becomes increasingly strained, weaknesses become apparent, and losers start looking for someone to blame. Where do they look? In the small print. And the small print of the contracts, trust deeds, marketing documents and member communication materials looks set to come under increasing scrutiny as the austerity measures tighten their grip.
In the weeks before Christmas we saw several such examples. After leading the pensions industry to believe that a statutory override on RPI was going to come to the rescue of those schemes unlucky enough to have hard-wired that definition into their trust document, the DWP apparently backtracked. The 60 per cent of schemes that are stuck with RPI have been described as being victims of a drafting lottery. I am sure the lawyers who drafted those documents will be hoping their clients continue to see the error as bad luck.
After leading the pensions industry to believe that a statutory override on RPI was going to come to the rescue of those schemes unlucky enough to have hard-wired that definition into their trust document, the DWP apparently backtracked.
More likely, however, is that other lawyers will be suggesting to them that these pension scheme deeds should not have been drafted in this way in the first place.
Everybody has known for years that the government changes its mind on pensions legislation, and it is lawyers’ jobs to make sure they think of these things. Intellectual property rights are regularly described as holding sway in ’the UK, the rest of the world and the universe’, just in case someone figures a way to establish a business in space. By contrast, inserting ’RPI or the statutory minimum at the time being’ should have been standard practice.
More drafting work for the lawyers seems likely in the definition of ill-health early retirement. The new £50,000 annual tax-advantaged pension contribution limit allows Iherps for people with severe disabilities. But where scheme rules are more relaxed than the Treasury about ill-health early retirement, a charge could be created.
We are bound to see more areas of legal conflict as the efinancial pain of austerity measures works its way through the system. When the going gets tough, the tough get litigious.