In a recent Deputy Pensions Ombudsman (‘DPO’) case3, the employer had a discretion to determine who should receive a lump sum death benefit under the scheme (which is unusual, as this would normally be down to the trustees). The complainant was the partner of a deceased member and had been named on the member’s expression of wish form.
The employer said that it recognised the importance of not simply paying the death benefit to the person named on the form and the need to make enquiries about other potential beneficiaries but the employer made those enquiries only after the lump sum had already been paid. The employer was therefore found, by the DPO, to not have acted properly in the matter and was directed to reconsider its decision as to the distribution of the lump sum (notwithstanding the potential difficulties with the lump sum having already been paid out). The employer was also ordered to pay the complainant £500 as redress for the non-financial loss she had suffered.
This case is a useful reminder of the importance of applying the correct procedures when exercising discretions – in this case – in the payment of lump sum death benefits. More widely, it is important that employers adopt a correct procedure when taking any decisions in relation to the pension provision that they make. Please see our article in the August 2015 edition of Pensions Pieces on the Supreme court case of Braganza for further details.