The significant issue was that of the claimant’s pension loss claim. The claimant’s primary approach to pension was that had he followed the career progression with the defendant his pension was a form of insurance providing a defined final sum on retirement as opposed to defined contribution towards an undefined final sum.
The methodology of calculation of pension loss should be the annuity option and the claimant was not required to give credit for any residual defined employer contributions to his pension post-employment with the defendant as that pension policy was subject to the vagaries of the market.
The annuity method was rejected by the defendant. As a matter of principle, the annuity method was speculative as to annuity rates in 25 years’ time. It leads to overcompensation as no allowance is given for funds within the claimant’s pension at the time of his employment with the defendant, the claimant would receive a lump sum now which he could invest and achieve growth and then purchase an even higher retirement benefit in 25 years’ time and effectively it is a claim for loss of investment. Case law has previously disapproved the annuity method.
The Defendant maintained its stance that the correct method of calculation of pension losses was for the ‘but for’ and ‘actual’ pension pot size to be calculated at retirement. Annual revaluation of RPI is applied annually pre trial but not post trial as the claimant will then have opportunity to invest the accelerated lump sum received.