If your pension scheme has a legal issue, could a court settlement be a practical alternative to litigation?

Following the High Court’s approval of the Places for People settlement, Places for People Pension Trustee Ltd v Places for People Group Ltd and others [2025] EWHC 3371 (Ch), we look at the types of issues that were compromised, and what this may mean for trustees and employers with schemes with similar problems. The parties did take over three years to negotiate a settlement and then asked the court to approve the settlement and make it binding on all members.

Many schemes have historical documents that present three areas of risk:

• First, validity problems where deeds or amending instruments were not executed with the required formalities or by all necessary parties, or where section 37 confirmations were not obtained for contracted-out benefits changes. These defects can call into question whether changes ever took legal effect
• Secondly, drafting errors that produce unintended outcomes, including paradoxical consequences where a change intended to reduce cost in fact increases benefits and hence the employer's liabilities
• Thirdly, administration of benefits that did not always exactly match those required under the scheme governing documents.

In Places for People, the court identified defective execution, missing section 37 confirmations, and drafting that unintentionally improved benefits as core sources of uncertainty.

Those risks can create significant financial exposure for employers and problems for trustees. If amendments prove ineffective or have unintended effects, members may be entitled to more valuable benefits than those intended, requiring the scheme to fund benefits that neither trustees nor employers budgeted to pay. Former members who transferred out can also be affected, because transfer values were set by reference to anticipated entitlements. The judgment emphasised that the interests of multiple stakeholder groups diverge and that full litigation of all issues would be complex and costly.

The settlement approved by the court addresses these problems in a structured way. It validates the relevant deeds and insulates them from being void or voidable for lack of section 37 confirmation, while implementing agreed rectifications so that documents reflect the intended benefits and obligations. It also delivers additional benefits to stakeholders to recognise the possibility that, at specified decision‑points, members could have been entitled to more than they in fact received, and it requires execution of validating deeds for certain benefit changes going forward. In Places for People, the settlement ensures all deeds at issue are treated as valid subject to statutory safeguards, proceeds on the basis of rectification, grants additional benefits calculated by reference to defined junctures, and obliges the trustee and employer to execute validating deeds for RPI‑linked increases otherwise at risk.

Rectification plays a central role by aligning documents to the parties’ proven common intention at the time, correcting drafting mistakes that had unintended effects. The court granted rectification of the specified instruments, noting that administration had consistently proceeded as if the documents already reflected the intended position, and that the evidential record overwhelmingly supported correction.

For trustees and employers, this approach offers practical outcomes.

• First, it cures execution and section 37 defects that otherwise threaten historic amendments
• Secondly, it aligns benefit specifications by correcting documents to match intended design, removing paradoxical uplifts and scope errors
• Thirdly, it quantifies and settles residual risk through targeted additional benefits, providing certainty and avoiding protracted litigation costs.

In the case before the court, the modelled settlement was held to be a sensible way to resolve the issues and within a range of reasonable outcomes for all represented persons.

Please contact your usual adviser if you would like to explore whether a similar framework could help address legacy documentation risk in your scheme, or if you require support with validating or rectifying historic deeds and aligning administration with intended benefits and obligations.