The High Court1 has decided the Government Actuary’s Department (GAD) is a scheme administrator and may be liable for acts of maladministration. The case serves as a useful reminder of the wide scope of people who may fall within the Pensions Ombudsman's jurisdiction and the need to have processes in place to limit the risk of being found liable for maladministration.
Under the Firefighters' Pension Scheme (FPS), GAD is responsible for setting commutation factors. Members complained that they had suffered loss because factors had not been updated between 1998 and 2006. GAD accepted that it was a scheme administrator in respect of its actions after April 2005 but, on a technical point, claimed it was not an administrator in relation to actions before this date – it had only given independent advice to the FPS.
The Court decided providing commutation factors was part of the administration of the scheme. GAD had a specific statutory duty to decide periodically whether to review the factors. A person could be an administrator even if they engaged in running only part of a scheme.
While the case deals with the technical point of who is a scheme administrator in respect pre April 2005 actions and statutory duties imposed in relation to a public sector scheme, it serves to highlight the breadth of who may be classed as a scheme administrator and liable for acts of maladministration. A person need only have a limited role in running a scheme to come within the Pensions Ombudsman's jurisdiction.
In schemes where factor setting powers are vested in the scheme actuary, actuaries should ensure that they have processes in place to protect themselves from a member challenge that factors are no longer appropriate. Service providers should also consider putting protections in place where liability arises despite acting within the terms of their retainer.