Estoppel

The employer or the Trustee may estop themselves from denying the employees are entitled to higher pension benefits than those to which they are entitled under the provisions of their pension trust as a result of making announcements and issuing booklets to members in which those higher benefits are set out {Icarus (Hertford) v Driscoll [1990] P.L.R. 1; ITN v Ward [1997] P.L.R. 131}

 Where an express Power of Amendment is utilised, that power, like a power of appointment, has to be exercised in the manner envisioned by its terms. The employer must always act in accordance with the “imperial” duty of good faith. The Trustees must exercise their own discretion rather than simply following the suggestions of the employer. They cannot validly make an amendment which reduces to present or future pensions which have already accrued and cannot make one which reduces the future accrual of benefits.

Further, both employer and trustees must use the Power of Amendment for the purpose for which it is conferred; in the absence of contrary indication, this is to promote the purpose of the scheme, whether those purposes are expressly stated in the trust deed or not. However, it is accepted that these purposes are not immutable and may change over time as the pension scheme itself evolves {Re Courage Group’s Pension Schemes [1987] 1 WLR 495}.

Amendments have been successfully challenged on the ground that they did not promote the purpose of the scheme {also see Harwood-Smart v Caws [2000] P.L.R. 101; Best v Stuart [2001] P.L.R. 283}.

An amendment can also be successfully challenged if its terms fail to comply with any restriction written into the Power of Amendment by the trust deed; these tend to be substantial.

A provision permitting the amendment of the power of amendment itself is valid, although an increase in the restrictions imposed on the Trustees could never be justified since the trustees would thereby be fettering their own discretion. The removal of existing restrictions would not be easy to justify unless they are purely formal.

Wilson V Metro Goldwyn Mayer (1980) 18 NSWLR 730 affirms that a power given to a person to amend a trust deed may be construed as a power in which fiduciary obligations preclude the donee of that power using it to benefit the done.

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