The High Court in Durkin v The Pensions Ombudsman & anor dismissed an appeal from a determination of the Pensions Ombudsman (PO) on the grounds that the determination did not contain any serious or significant error.
A member of the SIAC Construction Limited Non-Contributory Pension and Death Benefits Plan complained to the PO about pension arrangements entered into with his employer which purported to place a cap on the pensionable salary of the member under the scheme. A deed of amendment had been introduced which allowed the employer, upon notification in writing to the trustees and upon receipt by the trustees of the prior written consent of the member, to impose a limit on the member’s annual salary under the scheme. The member was asked in 2008 to accept a cap in pensionable salary and in consideration of same was given access to a long term incentive scheme. In 2008, the member confirmed that he accepted the offer subject to two conditions. By a further letter in 2009, he confirmed his agreement that contrary to the rules of the Scheme, any bonus or further payments which he received over his normal salary entitlement would not be pensionable salary under the scheme.
The member took a complaint to the PO on the basis that the scheme trustees had not received the required member consent and that even if the consent requirement was met, the preservation requirements of the Pensions Act 1990 meant that any reduction in a member’s preserved pension entitlement should have been phased in. The trustees took legal advice on the latter point and were advised that phasing in of the cap on pensionable salary was not required.
The PO dismissed the member’s complaint on the basis, inter alia, that the conditions inserted in the member’s consent in 2008 did not render it invalid and that the preservation requirements under the 1990 Act did not require the cap to be phased in.
In an appeal to the High Court, it was claimed that the PO had erred in fact and law by finding that the requisite consent was present. The Court said it would be slow to interfere with the decisions of expert administrative bodies such as the PO and the member was required to prove that the decision reached by the PO was vitiated by a serious and significant error or a series of such errors. This was not proven in the eyes of the Court. The High Court dismissed the claim by the member and did not look behind the decision of the PO as he had set out his reasons for his determination.
This case highlights that the Courts will only set aside a decision of the PO where a very serious or significant error has occurred. Therefore it is important that trustees engage fully and liaise with the PO should a member make a complaint to the PO.