Ratio Decidendi
An employer exercising discretionary powers in relation to a pension scheme owes an implied duty of good faith (the 'Imperial duty') which prevents the employer from exercising its powers in a way that would undermine the reasonable expectations of scheme members.
ਤੱਥ
IBM decided to close its defined benefit pension scheme to future accrual and transfer members to a defined contribution arrangement. Members claimed IBM had breached its duty of good faith by conducting a flawed consultation process and making misleading communications about the financial position of the scheme.
ਫੈਸਲੇ ਦਾ ਸਾਰ
The Court of Appeal upheld the finding that IBM had breached its Imperial duty of good faith. The duty required IBM not to act in a way that would destroy or seriously damage the relationship of trust and confidence with scheme members. The flawed consultation and misleading information fell below the standard required.
ਮੁੱਖ ਹਵਾਲੇ
"The Imperial duty is a modest one, but it is not toothless. It requires the employer not to act in a way that no reasonable employer would act in the circumstances."
— Asplin LJ
ਬਾਅਦ ਦਾ ਇਲਾਜ
Key authority on the scope of the employer's Imperial duty of good faith in pension scheme management.
Referenced in subsequent cases regarding pension scheme closures and transitions from DB to DC arrangements.