Northumbrian Water Limited v Northumbrian Water Pension Trustees Limited & Anor

Facts

Northumbrian Water Limited (NWL) is the sponsoring employer of the Northumbrian Water Pension Scheme, which has been in significant deficit, funded at 81.5% as at the December 2022 valuation. Rules 4.9 and 4.10 of the WPS Section's Trust Deed dated 22 June 2017 govern annual increases to pensions in payment and deferment attributable to pre-2008 pensionable service, guaranteeing increases up to 5% of RPI (the 'Guaranteed Amount') with provision for a further increase where RPI exceeds 5% and, after actuarial consultation, the Trustee considers this affordable without increasing the employer's ordinary annual contributions ('Limb 1A'), or such lesser amount as it considers prudent ('Limb 1B'), with shortfalls capable of being caught up in later years ('Limb 2'). RPI exceeded 5% in 2021-2023 for the first time in many years, prompting a dispute between NWL and the Trustee, Northumbrian Water Pension Trustees Limited, over the proper construction of Rule 4.9. NWL issued a Part 8 claim in March 2025 seeking the court's directions on a series of construction issues. John McGovern, a pensioner member, was joined as second defendant to represent members favouring the widest scope for increases, with NWL representing those favouring the narrowest, under a representation order. Expert actuarial evidence was adduced from Mr Tayyebi and Mr Benstead; many issues were agreed, several remained contested.