Atos IT Services UK Ltd v Atos Pension Schemes Ltd

Factual and Procedural Background

This opinion concerns a Part 8 claim involving the construction of a pension scheme known as the Atos UK 2011 pension scheme ("the Scheme"). The Principal Employer (the Claimant) and the Trustee (the Defendant) seek suitable representation orders to represent all interested parties on either side of the questions raised. The central issue concerns which index should be used to increase pensions in payment under the Scheme, specifically whether the Retail Prices Index ("RPI") or an alternative index such as the Consumer Prices Index ("CPI"), RPIJ, or CPIH should apply.

The Scheme is governed by an Interim Deed dated 30 June 2011, supplemented by a draft definitive trust deed and rules (the "Draft 2011 SBS Deed") incorporated by reference. The Definition of "Retail Prices Index" to be construed is contained in the Draft 2011 SBS Deed and applies for calculating annual pension increases for certain benefits. The definition refers to the "general index of retail prices (all items) published by the Office for National Statistics" and includes provisions for substitution if that index is not published or ceases to exist.

The Scheme was established following the acquisition by the Atos group of Siemens IT Solutions and Services Ltd, transferring employees from the Siemens Benefit Scheme ("SBS") into the new Scheme with mirror benefits. The Interim Deed and associated documents provide for the continuation and accrual of pension rights, with the relevant definitions and provisions drawn from the SBS rules and its amendments.

Expert reports from economists and statisticians were submitted by both parties but no oral evidence was heard. The experts provided background on the history, composition, and differences between inflation indices, focusing on RPI and CPI, including the technical "formula effect" that causes RPI typically to be higher than CPI.

The court was asked to determine the proper construction of the Definition of "Retail Prices Index" in the Scheme documents, and whether the trigger condition for substituting another index (i.e., where RPI is not published) has been met.

Legal Issues Presented

1. What did the phrase "the general index of retail prices (all items) published by the Office for National Statistics" mean at the time the Interim Deed was executed on 30 June 2011?
2. Does that phrase mean anything different today or at any time between 2011 and the present?
3. Is RPI still "published" for the purposes of the Definition?
4. What is the correct interpretation of the trigger condition "where that index is not published" in the Definition?
5. Whether the trigger condition for substituting an alternative index has been met.

Arguments of the Parties

Appellant's Arguments (Principal Employer)

• Contended that the Definition should not be construed as referring solely to RPI today, arguing that due to the "demise of RPI" and its flaws, the Definition should be interpreted as referring to an alternative index such as CPI or CPIH.
• Argued that the trigger condition "where that index is not published" should be interpreted broadly, potentially meaning that RPI is not published as a National Statistic or as the preferred measure of inflation, thus permitting substitution of another index.
• Highlighted a conflict with other provisions allowing substitution of a "reasonably likely figure" during temporary unavailability of RPI, suggesting the Definition’s trigger condition contemplates a permanent replacement.
• Relied heavily on the Supreme Court decision in Lloyds TSB Foundation for Scotland v Lloyds Banking Group Plc to argue that the meaning of defined terms can adapt to fundamentally changed and unforeseen circumstances.

Appellee's Arguments (Trustee)

• Submitted that the Definition unambiguously refers to RPI as it was understood at the time of the Interim Deed and continues to mean RPI today, regardless of criticisms or diminished status.
• Maintained that RPI remains published by the UK Statistics Authority ("UKSA") under a statutory obligation (s. 21 of the Statistics and Registration Service Act 2007), so the trigger condition for substitution has not been met.
• Argued that "published" should be given its ordinary English meaning of being made public, not qualified by National Statistic status or suitability for pension indexation.
• Rejected the application of a mobile or dynamic interpretation of the Definition, emphasizing that the purpose of a definition is to fix the meaning at the time the instrument was executed.
• Distinguished the Lloyds case as involving a different factual and legal context, where the meaning of "profits" was fixed to the parties’ original understanding despite changed accounting rules.

Table of Precedents Cited

Court's Reasoning and Analysis

The court began by identifying the proper construction of the Definition of "Retail Prices Index" in the Scheme documents. It held that the phrase "the general index of retail prices (all items) published by the Office for National Statistics" unambiguously referred to RPI as it was understood and published at the time the Interim Deed was executed in 2011. This meaning remains fixed and does not change over time.

The court rejected the appellant’s argument that the Definition should be interpreted dynamically to reflect changed circumstances or the decline in RPI's status. It distinguished the cited Lloyds case, which concerned a different factual and legal context involving accounting changes, and reaffirmed the principle that defined terms in written instruments have a single, fixed meaning determined at the time of execution.

Regarding whether RPI is still "published," the court found it is still published by the UKSA, which is under a statutory obligation (s. 21 of the Statistics and Registration Service Act 2007) to compile and publish RPI monthly. Although the UKSA and ONS consider RPI flawed and would prefer to cease publication, they remain legally required to continue publishing it, at least until 2025 or possibly 2030.

The court interpreted the trigger condition "where that index is not published" in the Definition as meaning that RPI must cease to be published for any purpose to trigger substitution. It rejected narrower or more qualified interpretations of "published" (such as requiring National Statistic status or suitability for pension indexation). It also rejected the argument that temporary non-publication in a particular month would trigger substitution, as this conflicts with other provisions dealing with temporary unavailability.

The court found that the presence of a final sentence in the Definition permitting substitution if RPI "ceases to exist" does not affect the ordinary meaning of "published" because if RPI ceases to exist, it necessarily ceases to be published. Hence, the final sentence is effectively redundant and does not require a special interpretation of "published."

The expert evidence explaining the technical differences between RPI and CPI, including the formula effect and the statistical flaws of RPI, was acknowledged as helpful background but did not affect the court’s construction of the Definition.

Overall, the court concluded that the Definition unambiguously refers to RPI as it was understood in 2011 and continues to mean RPI today, so long as RPI continues to be published under statutory obligation, which it does.

Holding and Implications

The court’s final decision is that the Definition of "Retail Prices Index" in the Scheme documents means RPI as understood and published at the time of the Interim Deed in 2011 and continues to mean RPI today.

The trigger condition for substituting an alternative index ("where that index is not published") has not been met because RPI is still published by the UKSA under statutory obligation. Consequently, no substitution of the index is permitted under the Scheme’s provisions.

The direct effect is that pension increases under the Scheme must continue to be calculated by reference to RPI unless and until RPI ceases to be published. The court did not establish any new legal precedent but reaffirmed established principles of contractual and pension scheme construction, particularly the fixed meaning of defined terms and the ordinary meaning of words like "published."