Cash payments made to Scottish and Newcastle employees to placate them over the loss of their defined benefit pension are taxable, the Court of Appeal finds.
Unions have appealed the High Court judgement which ruled the government's decision to uprate public sector pensions in line with CPI inflation was lawful.
The Society of Pension Consultants has urged government to pass legislation defining money purchase benefits immediately, or risk schemes not operating correctly.
A ruling that trustees have relied on to unwind decisions without formal rectification since 1975 has been swept away by the Court of Appeal.