The New Airways Pension Scheme has made an amendment to its scheme rules to be able to deny benefit to a member’s spouse or dependant who is guilty of that member’s murder.
The general principle that pension entitlements cannot be forfeited has certain exceptions set down in law, including cases involving murder and manslaughter of a scheme member, or fraudulent activity affecting the scheme (see below).
But some schemes have chosen to write such forfeiture clauses into their rules as part of a general tidy-up of the explicit precepts governing their members’ entitlements.
The £9.6bn British Airways scheme made an amendment to its trust deed and rules last month to the effect that trustees “may decide that any part of a benefit payable or prospectively payable” to a surviving spouse, civil partner or other dependant could be forfeited, subject to the regulations and another scheme rule on guaranteed minimum pensions.
"Regulations exist which say that if a spouse murders their other half, who is a pension scheme member, then the trustees are allowed to take away the death benefit pension payable to the spouse,” said Anne-Marie Winton, partner at law firm Nabarro.
“Normally this is not allowed as it forfeits the spouse's pension, but in these extreme circumstances, the trustees are allowed, in effect, to take a moral decision to take away the benefit.”
Lesley Browning, partner at law firm Norton Rose Fulbright, said the forfeiture legislation allows the benefit claim to become void if the recipient or potential recipient is convicted of the prescribed offences.
“What the trustees and employer have done is import this statutory power into the scheme rules, although it is slightly narrower, as manslaughter is excluded.”
The BA scheme has left itself some room for interpretation under the rules in the event of a specific case, according to legal experts. “Note the rule says they ‘may’ forfeit – it is not mandatory to do so,” added Browning.
Forfeiture: the legal background
The Pensions Act 1995: an “entitlement, or accrued right, to a pension under an occupational pension scheme cannot be forfeited” subject to certain provisions.
These provisions include if the potential recipient has been convicted of treason, certain offences under the Official Secrets Act and other “prescribed offences”.
Set out in 1997 regulations, these offences include if the spouse or dependant is convicted of the murder or manslaughter of that member or “any other offence of which unlawful killing of that member is an element”.
The benefit can also be forfeited in cases where the recipient has caused a monetary loss to the scheme through criminal, negligent or fraudulent activity, or a breach of trust.
