The Pensions Ombudsman and Pension Protection Fund Ombudsman Annual Report and Accounts 2010/11 published this month highlights that complaints concerning benefits paid on ill health, members' transfer values and calculation of  members' benefits continue to top the subject matter for complaints to the Pensions Ombudsman.  The report holds no great surprises in that respect.  However, as in previous years, the report contains anonymised case examples which should provide food for thought to sponsoring employers, scheme trustees and administrators alike of the types of circumstances that could lead to complaints to the Pensions Ombudsman and which could help them to avoid them in the first place. In this e-alert, we identify these and other key points of interest in the report.


The report states that the Ombudsman will continue to seek to resolve matters as early as possible.  To this effect, case investigators will continue to reach a view on the likely outcome of the complaint at any point during their investigation, which should enable parties to reach early informal settlement of the dispute.  Alternatively, the investigator may write to the parties expressing their view and the reasons why, and only if either party disagrees with the conclusion will the matter then be referred to the Pensions Ombudsman or the Deputy Pensions Ombudsman for determination.  Case investigators are also being encouraged to use the telephone more to move cases forward.

Subject matter of complaints

The report sets out, by subject matter, the number of complaints received by the Ombudsman in the last year.  Disputes over  ill-health pensions continue to be the main subject area of complaints as they involve an "extra set of emotional, financial and medical uncertainties plus difficult judgments to be made at significant costs to schemes".   These are followed (in order of the number of complaints received by the Ombudsman in the last year) by:

  • Disputes over transfer values.
  • Early retirement (a matter on which scheme members will be especially sensitive to any errors because of the potential for impact on a reduced income).
  • Calculation of members' benefits.

Looking forward, the Pensions Ombudsman notes that complaints concerning enhanced transfers (where the member is given an incentive to transfer out of a defined benefit scheme) have not yet appeared - it is presumed this is because at the time of the enhancement, the member believes he or she has done the right thing.  Complaints if any are likely to come later when that view changes.

Case examples

Of the various case examples in the report, the following are of particular interest:

  • Disagreements about payments when someone has died.  The report reminds readers that the Pensions Ombudsman's role is restricted to deciding whether a discretion has been exercised properly and not to decide who should get the benefit.   Where the discretion has not been exercised properly, the Ombudsman will refer the issue back to the respondents for this to take place. 
  • Mal-administration resulting in distress and/or inconvenience.  Awards from the Pensions Ombudsman in such circumstances have typically ranged form £50 to a few hundred pounds.  However, in the case of Lambden (74315/3) earlier this year, the Pensions Ombudsman exceeded the High Court's recommendations that such awards should not exceed £1,000 by awarding the claimant £5,000.  (To view our update on the Lambden determination, click here.)
  • Scheme members incurring losses as a result of delay.  There have been a number of interesting decisions in this area recently, most notably the decision in Sweeney (79383/1) in which the Pensions Ombudsman reminded trustees that complying with a statutory deadline for providing a member with their statement of benefits does not necessarily mean that they cannot be found guilty of mal-administration.   (For our update on the Sweeney determination, click here.)
  • Appeals from Pensions Ombudsman's determinations.  The report notes that there were ten new appeals lodged in the year, this small number probably reflecting the fact that an appeal from the Ombudsman's determination can only be made on a point of law.   The appeal to the High Court in Molyneux v Department for Children, Schools and families [2010] EWHC 263 (Ch) (a case concerning ill-health pension) is particularly unusual in that the complainant has obtained leave for a further appeal to the Court of Appeal.  In recent years, it has been relatively unusual for appeals from the Pensions Ombudsman to go beyond a first instance decision. The Court of Appeal hearing is expected later in 2011/12. 

The full report can be found at