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The Actuary The magazine of the Institute & Faculty of Actuaries

Trustees lose Alitalia case

In Alitalia-Linee Aeree Italiane SPA v Rotunno and others [2008” EWHC 185 (Ch), the High Court has held that the trustees of the Alitalia pension scheme were not entitled to demand employer contributions calculated on the buyout basis.

The trustees had argued that the wording of the contributions rule, which required the employer to pay contributions “to secure the benefits under the scheme”, amounted to a guarantee for members and required buyout funding, so that the benefits could safely be paid if the scheme was to wind up. However, the court rejected this argument, preferring the employer’s contention that the funding objective was not to guarantee members’ benefits in all circumstances but to safeguard or protect the members’ benefits by adopting the funding method best suited to the changing circumstances of the scheme.

In relation to the role of the expert actuaries, the judge held that their evidence was admissible and helpful insofar as it described the various ways in which schemes can be funded, and the role that actuaries play in this process. The general practice of actuaries may be a relevant factor for the court to consider when construing a clause. But the construction of the scheme rules was a question for the court, and the views of individual actuaries had, at best, peripheral relevance.