Beaton v The Board of the Pensions Protection Fund

I have before me an appeal from the Ombudsman for the Pension Protection Fund. He was established under s.209(1) of the Pensions Act 2004, which provides,

The PPF Ombudsman is a separate statutory creature from the Pensions Ombudsman, although at present, and I understand as a matter of policy, the individual who holds that office, Mr Anthony Arter, is the same individual who holds the office of Pensions Ombudsman.

The PPF Ombudsman, who I will refer to as "the Ombudsman", is given functions under the Pensions Act 2004 in relation to reviewable matters, which are dealt with by s.206(1), which provides that,

I was not taken to Schedule 9, but it is not in dispute that one of the matters which is a reviewable matter is the amount of compensation payable to the member of a scheme which has entered the PPF, that is for which the Board has accepted responsibility.

In the present case, Mr Anthony Beaton (the appellant) is a member of a scheme which has entered the PPF and, under the provisions of the Pensions Act 2004, he was entitled to ask the Board of the PPF to review and reconsider matters, which they did, and, in the event that he was dissatisfied with the decision of the Board, and its Reconsideration Committee, he was entitled to bring the matter before the Ombudsman, which he did. The Ombudsman made a decision adverse to him, and there is an appeal (by s.217(1)) to the High Court. Section 217(1) of the 2004 Act provides:

Mr Beaton is a person bound by the Ombudsman's determination, because under regulations, which are The Pension Protection Fund (Reference of Reviewable Matters to the PPF Ombudsman) Regulations 2005 SI 2005 No. 2024, the determination of the Ombudsman is final and binding on the persons to whom notice or notification is given, and that includes the parties to the reference, and that includes Mr Beaton (see regulation 16(4)(a) and (5)(a)). Mr Beaton required permission to appeal, which was granted by Snowden J.

The underlying facts are not in dispute. I can take them from the skeleton argument of Mr Grant, who appeared for Mr Beaton. Mr Beaton was born in 1952. He commenced employment as an insurance broker for C T Bowring & Co in 1973. He became a member of the Bowring Group Staff Pension and Assurance Fund, which can be referred to as the "Bowring Scheme". He left employment with Bowring in 1994 and commenced employment with a company called Fenchurch Group plc and commenced pensionable service in the Fenchurch Group Pension Scheme ("the Fenchurch Scheme"). Both those schemes, and the Lambert Scheme, which I will come to, were final salary pension schemes.

As well as commencing as an active member in the Fenchurch Scheme, Mr Beaton was entitled to deferred benefits in the Bowring Scheme and entitled under statute to take a cash equivalent transfer value in respect of those benefits. He was offered, and accepted, a pension in the Fenchurch Scheme in return for his statutory transfer value, and the offer which he accepted was to have a fixed pension, which was initially quoted to him at £46,727.39 at age 65 but, because the transfer value ended up being slightly larger than had been anticipated, in fact bought him a fixed pension at age 65 of £47,633.22. I will call that the "£47,000 Pension".

He remained in pensionable service in the Fenchurch Group Scheme until that scheme was transferred into a successor scheme called the Lambert Fenchurch Staff Pension Scheme ("the Lambert Scheme"). That transfer took place with effect from 1^st August 1998. The announcement to the members of the Fenchurch Scheme indicated that the company (then called Lambert Fenchurch Limited), which then operated two pension schemes, wished to merge the two schemes by transferring all of the assets and liabilities of the Fenchurch Scheme into the Lambert Fenchurch Scheme. It offered membership of the Lambert Scheme to the members of the Fenchurch Scheme, including Mr Beaton, for future service, and Mr Beaton took up that offer. It also made clear that if a member decided not to join the Lambert Scheme, his or her benefits earned under the Fenchurch Scheme up to 31^st July 1998 would be transferred in any event to the Lambert Scheme. Mr Beaton remained in the Lambert Scheme, but in 2005, the principal employer of the Lambert Scheme went into administration and the scheme entered an assessment period for the PPF and in due course the PPF assumed responsibility for it.

Mr Beaton was then entitled to a pension of two origins, if I can put it like that. One was the £47,000 Pension, which he had originally earned by his service in the Bowring Scheme between joining the Bowring Scheme in 1973 and leaving it in 1994, and the second was his final salary benefit under the Fenchurch Scheme and Lambert Scheme, which instead of being a fixed amount, was based on his service in those schemes and his final salary. He in fact took early retirement in, I believe, 2007, and drew a lump sum, and he was left with a residual pension which, because of the operation of the compensation provisions in the Pensions Act, which I will in due course have to come to, amounted to initially some £17,000 a year. It has recently increased, I was told, to about £2,100 a month (or some £26,000 a year) as a result of provisions which give those with long service extra compensation, but the significant point, for present purposes, is that in calculating the amount of compensation to which he is entitled, the Board of the PPF had aggregated the £47,000 Pension with his pension from the Fenchurch and Lambert Schemes and applied the cap to the entire amount.

In this appeal, Mr Beaton's contention is that they were wrong to do so and that the cap should have been applied separately to the £47,000 Pension, and the remaining pension, with the result, I was told, although the detail of this is not in evidence, that Mr Beaton believes that if he succeeds in the appeal, he will be entitled to two pensions of roughly the same amount, although that is subject to a number of outstanding matters, which are not before me, and I am not able to ascertain the precise financial impact that a successful appeal would have for Mr Beaton, nor is it necessary for me to do so. The question, and the sole question, which arises on this appeal is whether Mr Beaton is right that the PPF should have calculated the compensation payable to him separately for the £47,000 Pension and his remaining pension or whether, as the PPF held, and as the Ombudsman decided, the two pensions should have been aggregated before application of the cap.

It is not necessary for me to go through the history of the way in which the dispute played out before the Board of the PPF and was reviewed and then reconsidered by the Reconsideration Committee. At all stages, the PPF stuck to its view that the two pensions should be aggregated for the purposes of calculating compensation. There were at earlier stages different arguments being put forward but all those have fallen away. The final argument, raised for the first time, I believe, before the Ombudsman, was that on the correct construction of para.26 of Schedule 7 to the Pensions Act 2004, the two benefits were not to be aggregated. That requires looking at Schedule 7, which sets out various rules in relation to the compensation payable by the PPF. As Mr Rowley QC, who appeared for the PPF, reminded me, the PPF has no power to pay benefits other than in accordance with the legislation, and that is a question of vires. He also reminded me that the PPF is not publicly funded; it is funded by levies on occupational pension schemes and any payment which it makes in accordance with the statute has to be funded by the levy payers. There is no question, therefore, of the answer to this dispute being determined, or even affected, by whether one does or does not have sympathy for the plight in which Mr Beaton finds himself, although it is noticeable that he was expecting a very much larger pension than that which he is currently being paid and one can understand that that causes him considerable financial difficulty.

Schedule 7 sets out a number of different rules. For present purposes, Mr Beaton comes under para.11 of Schedule 7, which applies to a member of a scheme who was an active member who had not attained normal pension age at the assessment date. The assessment date was in 2005, when the scheme entered the assessment period. Mr Beaton was then an active member and he had not then attained normal pension age, which was 65. The general provision is that those in that position are paid 90% of their notional pension, but that is subject, by para.26, to a compensation cap. The compensation cap varies, depending on the age of the member in question, and it also increases annually. I was told that the current compensation cap, to be found in the Pension Protection Fund and Occupational Pension Schemes (Levy Ceiling and Compensation Cap) Order 2017 SI2017 No.50, at para.4, is £38,505.61, but for various reasons, Mr Beaton does not receive the entirety of that sum.

Paragraph 26 was amended, in circumstances I will have to come to, by the Pensions Act 2014 and now reads as follows:

There are then provisions which tell one how to apply the cap, and I need not read the rest of para.26 but I should just note that in para.26(7) there is a provision that,

In the light of that, it is common ground that the Fenchurch Scheme is a scheme that is connected with the Lambert Scheme. It is the Lambert Scheme which is in the PPF but the Fenchurch Scheme is a connected scheme with the Lambert Scheme. On the other hand, it is also common ground that the Bowring Scheme is not a connected scheme to either the Fenchurch or Lambert Scheme.

What the Board of the PPF decided, and what the Ombudsman agreed, was that when one goes back to para.26(2)(b)(i), which requires that there be a benefit A and one or more other benefits "that are attributable to his pensionable service under the scheme or a connected occupational pension scheme", which is referred to as benefit B, the words "attributable to his pensionable service" are satisfied in this case because Mr Beaton, as Mr Grant accepts, was only entitled to the £47,000 Pension because he was able to take a transfer from the Bowring Scheme to the Fenchurch Scheme, and he was only able to do that because he had joined the Fenchurch Scheme and was therefore in pensionable service under the scheme.

The way the Ombudsman expressed it, having at para.89 of his determination referred to a dictionary definition of "attributable" as being "caused by or able to be ascribed to", is this, at para.89 to 90,

I think, on any view, he was wrong to suggest that it could be ascribed to Mr Beaton having pensionable service in the LSF Scheme, which is a reference to the Lambert Scheme, because, as I explained earlier, the terms on which the Fenchurch Scheme was merged into the Lambert Scheme meant that his benefits under the Fenchurch Scheme, including the £47,000 Pension, would have been transferred to the Lambert Scheme whether he joined the Lambert Scheme or not, and in those circumstances it is difficult to say that his entitlement to the £47,000 Pension under the Lambert Scheme is attributable to pensionable service under the Lambert Scheme, because he would have had it whether he had any pensionable service under the Lambert Scheme or not. Nevertheless, I do not think that has any practical consequences, because exactly the same reasoning would apply to his joining the Fenchurch Scheme and, as I have said, it is accepted by Mr Grant that he only became entitled to the £47,000 Pension in the Fenchurch Scheme because he had pensionable service in the Fenchurch Scheme and joined the scheme as an active member. If the Ombudsman is right, therefore, that that means that the £47,000 Pension may be ascribed to, and hence attributable to, pensionable service under the Fenchurch Scheme, that would equally qualify under para.26(2)(b)(i) because although it would not be a benefit attributable to his pensionable service under the scheme, which is a reference to the scheme in the PPF, in this case the Lambert Scheme, it would be attributable to pensionable service under a connected occupational pension scheme, namely the Fenchurch Scheme.

The substantive question, therefore, is whether the Ombudsman was right to say that the £47,000 Pension was attributable to Mr Beaton's pensionable service in the successor scheme, although, as I have explained, in my judgment it is in fact the Fenchurch Scheme which is the contender rather than the Lambert Scheme.

The appeal is on the basis, in effect, that that is a misinterpretation of what the words "attributable to his pensionable service under a scheme" mean. I was referred by Mr Grant to a number of principles of statutory construction, none of which were disputed as such by Mr Rowley, although he put forward some slightly different emphasis. I will list them very briefly without much comment, because, as I say, they were not in dispute. Firstly, the general aim of statutory construction is to ascertain the intention of the legislature. That can be found, for example, stated in the speech of Lord Bingham of Cornhill in R v Secretary of State for Health ex parte Quintavalle [2003] UKHL 13 [8]:

Although it has been said that words should be given their natural and ordinary meaning, that does not mean that one should apply the literal meaning of words in a vacuum. Lord Bingham continues in the same paragraph:

The other principles are that statutes should be construed as a whole; that similar words, or the same words, in an instrument should normally be bear the same meaning, although in exceptional cases, the court may be driven to the conclusion that they do not; that different words equally should normally be expected to have different meanings; and that words should not be assumed to have no purpose or to be idle.

As Lord Justice Toulson said in An Informer v A Chief Constable [2012] EWCA Civ 197 [67]:

Mr Grant also referred me to the principle that there is a strict test of implication in statutory construction, but I agree with Mr Rowley that that principle is not really in play in this appeal.

The context for the current version of para.26 of Schedule 7 is that para.26, as originally enacted, was in a rather different form. It then provided as follows:

Under that provision of para.26(2) there is no doubt, and Mr Grant accepted, that Mr Beaton's two benefits (the £47,000 Pension and the other pension) would have been aggregated for the purposes of calculating compensation and the cap on the compensation, because, as well as benefit A, he would also fall within the words, "he becomes entitled to relevant compensation in respect of one or more other benefits under the scheme", there being no doubt that the £47,000 Pension is a benefit under the Lambert Scheme.

The impetus for the amendment in 2014 can be seen from some Parliamentary material which I was referred to by Mr Rowley in accordance with the principles in Pepper v Hart, and I will have to look at that material in due course, but I prefer to start with what I would regard as the normal meaning of the words as they stand in the amended form of para.26 of Schedule 7, which I should say is made retrospective to 2005, when the PPF compensation provisions first came in, without regard to the Parliamentary material, which indeed was not deployed before the Ombudsman and has only been brought to light as a result of this appeal.

The starting point is not, I think, in the end helped by a debate about the meaning of the words "attributable to". I was referred to a number of dictionaries and none of them provided a definition of "attributable to" which seemed to me to resolve the question of statutory construction or interpretation which I am faced with. It is true that the Ombudsman relied on a dictionary definition of "caused by" or "able to be ascribed to" and, as a general synonym for "attributable to" I see no particular problem with that. In the dictionaries I was referred to, some refer to causation and some refer to ascribing something to something else, but I do not regard "attributable" as in itself a difficult or ambiguous word - it means what the dictionaries say it means: something is attributable to something else if it can properly or reasonably or sensibly be ascribed to something else - and I am content to proceed on the basis that that is the normal meaning of the phrase "attributable to". What, however, the dictionary cannot shed any light on is the normal meaning of the phrase "attributable to pensionable service" and that is the phrase which is to be interpreted in para.26(2)(b) and that is, I think, a phrase that has a conventional or normal meaning in the practice of those who practise in the field of occupational pensions.

It is, of course, possible for pensions to be provided for any manner of reasons, but in the standard occupational pension scheme of the type with which the PPF is largely concerned, that is occupational pension schemes where the quantum of pension is dependent on the length of the member's pensionable service, I would regard the ordinary meaning of a benefit being attributable to pensionable service as meaning that it is a benefit which is earned by the member as a result of giving service to an employer while a member of a pension scheme under which he accrues or earns a future pension. That is all very familiar stuff, and one finds, as Mr Grant showed me, in Schedule 7 itself (and I was told elsewhere in the Pensions Act, and other Pensions Acts, none of which I find surprising, but I was only shown the provisions in Schedule 7) several examples where it is clear that that is the meaning which the phrase "attributable to pensionable service" is intended to bear. I will give some examples. There was one in para.12 of Schedule 7, which deals with revaluation, and para.12(3) provides,

Pausing there, that is a clear example where the accrued amount of a pension, which accrues in the usual way over a period of service, is divided into part of the pension attributable to pensionable service before a particular date and part attributable to pensionable service after that date, and in that context, it seems to me to be entirely clear that what the draftsperson had in mind by the phrase "attributable to pensionable service" was the notion that a pension benefit of this type accrues over time as a result of service being given over time.

There is a similar example in para.28, which deals with increases in periodic compensation and refers to amounts attributable to post-1997 service and attributable to pre-1997 service. Indeed there is, as Mr Rowley showed me, a definition of pensionable service for the purposes of Schedule 7 in para.36(4), which reads as follows,

One sees there the statutory definition of "pensionable service", which refers to service in employment which qualifies the member for benefits under the scheme, and, as I say, it is a familiar notion that providing service to an employer while an active member of an occupational pension scheme qualifies the member for benefits under the scheme by building up a pension over time, and the amount of that pension can, as we have seen from some provisions in Schedule 7, be attributed to different periods of service.

It is true that not all benefits under pension schemes can be attributed to particular periods of service, and indeed in para.26(a)(ix) there is a reference to a case where the Board is satisfied that under the rules of a scheme,

So the notion that one can have a benefit not attributable to a particular period of pensionable service is a familiar one. Nevertheless, the standard benefits which a member builds up under an occupational pension scheme are benefits which are in the familiar way attributable to that pensionable service, in the sense that it is that pensionable service which qualifies the member for those benefits and those benefits accrue over the time that the member provides service. That is what I would regard, even without the other examples in this schedule, as being the normal meaning of the phrase "a benefit is attributable to pensionable service", and on that normal meaning, I do not think there is really any doubt that, if one asks the question whether the £47,000 Pension was attributable to Mr Beaton's pensionable service under either the Fenchurch Scheme or the Lambert Scheme, the answer would be, No; it is attributable to the service which he provided as an employee to Bowring while an active member of the Bowring Scheme and which he accrued under the Bowring Scheme. Indeed, the Ombudsman himself referred to the conventional meaning of the phrase, in a telling part of his determination when he said this (at para.86),

Indeed, at a stage when the Ombudsman was investigating the complaint, a senior adjudicator in the Ombudsman's office sent an email to the PPF in which she said this:

The response, having taken a point which is no longer relied on that there was only one benefit (it is accepted by Mr Rowley, as the Ombudsman held, that there are two separate benefits that Mr Beaton was entitled to), said this:

In effect, the argument there put forward is the argument which Mr Rowley has contended for before me, namely that whatever the usage of "attributable to pensionable service" elsewhere in Schedule 7, in the case of para.26(2)(b), the £47,000 Pension is attributable to Mr Beaton's pensionable service under the Fenchurch Scheme because it was only as a result of his membership of the Fenchurch Scheme that he was able to take the transfer value.

If one puts on one side for the moment the Parliamentary material which Mr Rowley relies on, I am not myself left in much doubt that there is no particularly good reason to give to the phrase "attributable to his pensionable service under the scheme" a different meaning from that which it would normally be regarded by pensions practitioners as bearing, as exemplified by the Ombudsman's own decision and his investigator's own email, and as, as I have sought to show, is illustrated by other provisions of Schedule 7 itself. The notion of a benefit being attributable to pensionable service under a particular scheme seems to me such a central notion of how it is that a final salary scheme works that, applying the normal principles of statutory construction, which I accept, as Mr Rowley asked me to do, require one to try and make coherent sense of the legislation as a whole, that it would be a very surprising result for these words to be interpreted differently in this provision from how they would normally be understood.

In all normal usage of the phrase, I agree with the Ombudsman that the conventional view is that the benefits were not attributable to service that Mr Beaton provided to his employer while an active member of the Fenchurch or Lambert Schemes; they were attributable to the service which he provided to Bowring while an active member of the Bowring Scheme and to the transfer value which he only qualified for by having provided that service and accrued those benefits under the Bowring Scheme. It is true that he would not have become entitled to the £47,000 fixed pension had he not taken the transfer value and would not have been able to take the transfer value had he not joined the Fenchurch Scheme, that being, as I say, something that Mr Grant does not dispute as a matter of fact. It is true that in that sense, joining the Fenchurch Scheme was a necessary pre-condition to having the £47,000 Pension in the Fenchurch Scheme. It is true, in that sense, that his joining the Fenchurch Scheme was a cause of him being entitled to the £47,000 Pension under the Fenchurch Scheme because, if he had not joined, he would not have been entitled to it there, but none of that, it seems to me, really gives force to the words "attributable to his pensionable service under the scheme", words which, I say, have a perfectly understandable and understood conventional meaning in this context, as referring to benefits which have built up as a result of service while an active member of a scheme.

There is an interesting provision, not of direct application but interesting because it was introduced at the same time, in para.26A(12) and (13), and sub-paragraph (12) reads:

That notion of the "source" of the benefits seems to me to encapsulate what I regard as the normal conventional meaning of benefits being attributable to something, being attributable to pensionable service under a scheme, or attributable to pension credit, or attributable to a transfer value, or not attributable to pensionable service. There is another interesting example in Sch.7 para.3(8), which reads as follows:

This illustrates that the draftsperson has envisaged that some benefits payable under pension schemes have a source other than the pensioner's pensionable service or a pension credit. I should say that there was no dispute that the reference to pension credits throughout this legislation is to a pension credit which is made available to a person as a result of a pension sharing order on divorce. The statutory definitions take one on a paper trail from s.318 of the Pensions Act 2004 via s.124 of the Pensions Act 1995 to s.29 of the Welfare Reform and Pensions Act 1999, but it is not disputed that pension credits are pension benefits which arise as a result of orders made on divorce.

Paragraph 3(8), as I said, envisages that a person may become entitled to benefits where the source of the benefit is not that person's own service or pension credit, and the obvious example is a dependant's pension, as Mr Rowley submitted, and indeed, when one looks at para.3(2), it is evident that that was the particular type of benefit which the draftsperson had in mind.

Nevertheless, going back to para.26, as I say, I would regard the notion of the source of the benefits as being a good synonym for the phrase "benefits attributable to X". The question to be asked is: Is the source of the benefit pensionable service under the scheme or a connected scheme? In that sense, the source of Mr Beaton's benefit (the £47,000 Pension) is not, in my judgment, his pensionable service under the Fenchurch Scheme. It is true that he is claiming benefits under the Lambert Scheme or, to be more precise, he is now claiming compensation from the PPF in respect of the benefits which he was entitled to under the scheme, but it was not the fact that he provided pensionable service under the scheme which qualified him for those benefits, although it was that fact which entitled him to have a transfer value in the way that I have explained.

In those circumstances, leaving aside for the moment the Parliamentary material, I would conclude that the Ombudsman had indeed erred, not so much in the meaning of the word "attributable" which he drew from the dictionary definition, but from the application of the notion of ascribing pension benefits to a particular source which he applied in the particular case. Mr Rowley, however, has shown me material from both Hansard and the Explanatory Notes in an attempt to persuade me that that is material that is admissible under the doctrine of Pepper v Hart and that it compels a different conclusion.

The general principles in Pepper v Hart [1993] AC 593 are well known. In the speech of Lord Browne-Wilkinson, he set out three pre-conditions. At p.640B he summarised his conclusions as follows:

What Mr Rowley referred me to was a statement by Lord Bates, who it is accepted was the relevant Minister promoting the Bill, in the House of Lords when moving amendments, and I have been shown a little bit of the legislative history, which shows that what became s.51 of the 2014 Act, which was the section which introduced amendments to para.26 of Schedule 7 of the 2004 Act, was introduced between the Bill being brought from the Commons and the Bill being amended in Grand Committee. That introduced a new clause 50 in the Bill, subsequently renumbered as clause 51 and in due course enacted as s.51 of the 2014 Act. What Lord Bates said when moving that amendment is as follows,

In Explanatory Notes, both provided for the Lords' amendments, and provided to s.51 of the Act once it had been enacted, a very similar explanation was given. I need only read one of them, which is the Explanatory Notes to s.51 as enacted, and para.220 reads as follows,

Mr Rowley said, I thought with some justification, that there is nothing in Lord Bates' statement to suggest that the mischief at which this reform was addressed went wider than the practice of the PPF of calculating the compensation and the cap separately for a person who was entitled to both an occupational pension and a pension credit arising from a divorce or civil partnership dissolution settlement, and it is quite clear that the impetus for the amendment was not a desire to change policy, but a desire to bring the legislation into line with the policy that had been intended, and had in fact been applied by the PPF, and that is why the amendments were made retrospective, to give retrospective legislative validity to the payments which the PPF had made which otherwise would have been, and no doubt were, ultra vires.

I accept that that is a clear statement of the mischief which had led to this particular amendment being put forward. However, when one looks at the Explanatory Notes, one can see that the person who drafted the Explanatory Notes has put that forward not as the sole impact of the legislation but as an example of the impact of the legislation, and it is not worded as narrowly as the explanation put forward by Lord Bates. I will refer back to the passage which says,

That sentence by itself does not confine the amendment or reform to the particular problem of a person having both a pension credit and an occupational pension in the way that Lord Bates' statement seemed to. Indeed, by referring to a derivation from "different sources, for instance ... a pension credit, and ... their own service in the scheme", it leaves open the question whether the section has a wider effect.

With the benefit of that, one can then go back to the guidance given by the House of Lords in Pepper v Hart. What was very striking in Pepper v Hart was that the Minister, when debating the relevant Bill in Parliament, had given explicit assurances directed to the very question which later became the subject matter of litigation. One can see that, for example, in the speech of Lord Browne-Wilkinson at p.635A, where he refers to a few cases in which,

Mr Rowley said that, as Lord Bingham said in Quintavalle, it is important to have in mind the mischief which Parliament was seeking to address, and that Lord Bates' statement is a clear indication of the mischief, and of the limited nature of the mischief which the amendment was designed to address, namely the desire not to aggregate benefits derived from pension credits with benefits derived from pensionable service, that is, effectively, other benefits under the scheme.

Nevertheless, it seems to me that even with the benefit of Lord Bates' statement, and even with an understanding of the mischief at which the amendment was directed, what one still has to do in order to be loyal to the principle of statutory interpretation is to go back to the language of the statute and see whether, understanding that that was the mischief at which the reform was directed, it is to be interpreted in the way which is suggested. The difficulty I have with that, in this particular case, is that it is true that this amendment achieves the effect that if a member of an occupational pension scheme has a benefit derived from his own service under the scheme, and a benefit derived from a pension credit, the two are not aggregated - in that sense, the reform achieves what it was intended to do and meets the mischief which had been identified - but if that had been all that was intended, one would have thought it would have been a great deal simpler to provide exactly that, that a person who was entitled to pension benefits under the scheme as a result of his own pensionable service, and to pension benefits attributable to pension credits, should not have the two aggregated but that any pension credits from the same transferor should be aggregated together.

That is not the legislative technique that has been adopted, as is apparent from the way in which the legislation has been amended. What has been done is to replace the notion in the unamended version of para.26, which referred to "one or more other benefits under the scheme", with the notion of "one or more other benefits that are attributable to his pensionable service under the scheme", and for the reasons I have sought to give, those words are rather narrower than all other benefits under the scheme other than those attributable to a pension credit, which is what Mr Rowley says the Parliamentary intention actually was.

In those circumstances, and it does not seem to me that it really matters whether this was a deliberate decision by the draftsperson or whether it is a consequence of the way it has been drafted, it does seem to me that it is very difficult to give to the words "one or more other benefits that are attributable to his pensionable service under the scheme" a wider meaning than they would normally and conventionally be regarded as having.

Mr Rowley pointed to a number of anomalies on Mr Grant's construction, and I accept that there are, on any view, anomalies. One which is particularly striking is that if, when offered a transfer value from a transferor scheme to a transferee scheme, the member is offered pension credits in the transferee scheme in the form of notional service in the transferee scheme, then that notional service in the transferee scheme would count as pensionable service for the purposes of Schedule 7. That is the effect of the definition of "pensionable service" in para.36(4) which I read earlier and which includes in 36(4)(b), "Any notional service allowed in respect of the member under the admissible rules which qualifies the member for such benefit". Such notional service may sometimes be granted under some rules in certain circumstances other than transfers but it can certainly, under many rules, be granted in respect of the receipt of a transfer value. It would follow, as Mr Rowley said, that two people who took transfer values would find that one who had taken a credit in the form of added years (that is notional service) would find that his transfer value was caught by the words of para.26(2)(b)(i) and the other, who had taken, as Mr Beaton did, a fixed pension which was not in the form of notional service, would find that it was not within para.26(2)(b)(i). I accept that there is no good policy reason for distinguishing between transfer values in that way.

I accept that that is an inevitable anomaly on Mr Grant's construction, but it seems to me that there is no construction which is capable of eradicating all the possible anomalies. Mr Rowley's submission really had underpinning it, unexpressed, the notion that all pension benefits under a scheme are either pensionable service benefits or pension credit benefits, but as the bulk transfer from Fenchurch to Lambert illustrates, that is not actually the case. There are many examples where people with benefits in scheme A have those benefits transferred to scheme B in circumstances where the member concerned does not become an active member of scheme B, and such a transfer of deferred benefits cannot, even on Mr Rowley's interpretation, be regarded as giving rise to benefits attributable to his pensionable service under the transferee scheme. If, as in the Fenchurch and Lambert case, the two schemes were connected, one could bring it within the paragraph by reference to the connection, but it is not necessary for the two schemes to be connected.

When bulk transfers were much more common than they are now, one of the circumstances in which bulk transfers took place was where there was a transfer of an undertaking where a business was transferred from one employer to another. Since the definition of "connected occupational schemes" requires the same person to be "an employer in relation to both schemes", a bulk transfer from scheme A to scheme B, where the employers were different, would not give rose to benefits under a connected occupational pension scheme. The practical consequence of that can be seen from the following example. A member of scheme A has deferred benefits in scheme A which are the subject of a bulk transfer to scheme B which is not a connected scheme. That transfer did not require him to be an active member of scheme B and so the resulting benefits could not, even on Mr Rowley's interpretation, be attributable to his pension service under scheme B. If he nevertheless subsequently became a member of scheme B and accrued benefits under scheme B, those benefits could not, it seems to me, be aggregated with the benefits deriving from scheme A, even if Mr Rowley were right. It may be that the draftsperson has simply not envisaged the types of benefit which may be available which are neither attributable to a pension credit nor attributable to pensionable service under the scheme, but a transfer value of the type that Mr Beaton had, which qualified him for a fixed pension in the transferring scheme, and a transfer of deferred benefits in respect of a person who did not need to become an active member of the new scheme, are, in my judgment, examples of benefits which are not attributable to pensionable service under the transferee scheme on any normal interpretation of the language.

Since, on any view, there are anomalies, I do not think I can allow potential anomalies to dictate the outcome of the interpretation or to displace what I would regard as the normal and conventional meaning of the language, nor am I persuaded that reference to the Pepper v Hart material is so clear an answer as to the reach of the new legislation, although, as I have said, I accept that it does provide a statement as to the mischief at which the new legislation was aimed, as to require me to depart from the conventional meaning that I would otherwise give to the words "benefits attributable to pensionable service under the scheme" in order to shoehorn the effect of the legislation into the narrow confines of Lord Bates' statement.

It may be that that means that those in the position of Mr Beaton - and I am unable to form any view as to how widespread his situation might be - have obtained from the way in which the legislation is drafted a windfall which went beyond the mischief which the legislation was enacted to address. That does not, it seems to me, enable me to displace the ordinary meaning of the phrase "benefits attributable to pensionable service under the scheme" and so as to give it what I regard as a very artificial and unconventional interpretation.

In those circumstances, I will allow this appeal. I will declare that Mr Beaton's £47,000 Pension was not, in my judgment, a benefit attributable to pensionable service under either the Fenchurch Scheme or the Lambert Scheme, and I am minded, subject to anything that counsel says to the contrary, to make no further directions but to remit the case to the Ombudsman to decide what consequences flow from my decision on the question of construction.