Two-tier provisions in teachers' pension scheme - relevant comparator - actual salary before restructuring with salary after restructuring

Secretary of State for Education and Skills v Bailey and Another: ChD (Mr Justice Pumfrey): 31 July 2003

Under restructuring arrangements, the first respondent stepped down twice in his job as a teacher.

Upon retirement, he sought to benefit from the two-tier provision in the Teachers' Pension Regulations 1997 (SI 97/3001), which provided that a pension could have two elements; the first was computed on the higher pensionable salary and, after reduction of salary, the second part was computed on the benefits accrued from the date of reduction of salary until retirement.

In assessing the respondent's entitlement, the Pensions Ombudsman decided that the relevant comparison was between the contributable salary received after the restructuring and the contributable salary if there had been no restructuring.

The secretary of state appealed.

Raymond Hill (instructed by the Treasury Solicitor) for the secretary of state; the respondents in person.

Held, that all and only the sums paid to the respondent falling within the definition of 'contributable salary' in the regulations were to be taken into account in computing the contributable salary received by the respondent; that the comparison called for by the regulations was difficult to apply where an element of the contributable salary could not be ascertained at the date of stepping down since the contributable salary might include elements which were essentially annual in nature and a final determination could only be made after the necessary period had elapsed; that, finally, the logical comparator in assessing whether there had been a reduction in salary was the last salary upon which contributions were actually paid; and that the comparison effected by the ombudsman was not supportable in law and the appeal succeeded to that extent.