Reports of employees losing their pensions and life savings are all too common. The public - those enrolled in pension schemes - are often seen as getting a raw deal and problems invariably arise because there are deficits within pension schemes and as always, it is money that prompts these issues to come to the fore, writes Frances Ennis.

Fund legal advisors are welcoming anything the courts can do to make the administration of pension schemes easier, less technical and more transparent, and to support the members of the schemes. In this respect, Scottish courts are leading the way and taking an increasingly commercial view of the administration of pension schemes.

Thankfully, today’s standards of scheme administration do not mirror those of 20 or 30 years ago, when there was little or no distinction between actuarial and legal advice, and a more relaxed approach to the need for precision and record-keeping prevailed, which has left a legacy of uncertainty for present-day scheme administrators.

The good news for those involved in schemes north of the border is that the Court of Session is taking an increasingly pragmatic and commercial approach to perceived uncertainties or inadequacies in scheme administration.

When pension regulation started to tighten up, holes began to appear in scheme administration – a hangover from the 1990s when regulation was much less strict. Regardless of the state of documentation and records, pension trustees are still entitled to recover sums of money from employers who should be paying pension contributions. The fact that the money owed has a technical name - ‘pensions contribution’ - should make very little difference. It is still debt and the employer should not be able to shirk its responsibilities to its pension members.

Where employers refused to make pensions payments that were due, many trustees felt that they had no alternative but to raise court action. By far the quickest and most effective way of doing this for higher value claims in Scotland, is in the Commercial Court of the Court of Session.

Lawyers have strongly impressed on the court that pensions contributions essentially relate to a commercial transaction. In many of these examples, employers have paid contributions over a number of years but then stopped, usually during times of recession. These same employers later try to rely on technical legal arguments to get out of paying the debt. The Commercial Court traditionally encourages parties to take a pragmatic, business-like approach to resolving disputes, and removing needless technicality.

Lord Drummond Young, a respected judge in the Supreme Courts of Scotland, has a wealth of commercial and trust law experience and he has been an unequivocal driving force in treating pensions cases commercially.

As far as he can, Lord Drummond Young, and other Scottish judges, are recognising the reality that pension schemes are difficult to administer. Schemes typically look after thousands of members and exist over decades, meaning that they have to be extremely reactive to changes in law. In Scotland at least, the courts often focus on how parties have behaved over a period of time, rather than the technical detail of a case. The law insists on making the process more commercially-orientated and, where possible, looking out for the best interests of each schemes’ members.

Contrast this with the English courts, which dare I say are slightly behind the times, and where it seems there is little evidence of a wholesale change in attitude from judges to the issue. Currently, many pensions-related cases are settled before they reach court because litigation is expensive, time-consuming and uncertain, and this results in a lack of case law when it comes to dealing with some of the most common issues such as equalisation and how loss should be calculated – creating further uncertainty.

But things could be set to change. A revision of The Chancery Court guide included a dedicated section on pensions, defining the subject and providing specific judicial knowledge, suggesting there could be a shift in English courts towards the Scottish way of dealing with pension schemes.

Pensions litigation has typically revolved around technical arguments or third parties arguing that they shouldn’t be responsible for any unintended liabilities. There is a need to continue to follow the steps that Lord Drummond Young and others are taking and apply a commercial approach to the problem – not to be overly prescriptive, and treat a pensions case as a commercial relationship.