In Lovewell Blake/Norwich Union, the Deputy Pensions Ombudsman had to consider how to quantify loss where an actuary had made an error in a scheme's actuarial valuation report. In this case, the actuary had failed to take account of a benefit improvement which allowed members with more than 40 years service to retire early with an unreduced pension.

Whilst the mistake pervaded, the employer paid relatively low contributions into the scheme and, in fact, took a contributions holiday for part of the period. It also made further benefit improvements.

The employer claimed that it would have made additional contributions into the scheme, had the actuarial valuation not been defective, and that it/the scheme lost the investment returns from those additional contributions. The employer also argued that it would not have made the later benefit improvements had they known the true funding position of the scheme.

The Deputy Pensions Ombudsman held that there had been maladministration by Norwich Union in that they failed to update the scheme's records to reflect the original 40 years service benefit improvement. This led to the flawed actuarial valuation. He rejected the submission by Norwich Union that the trustees and employer should have noticed the mistake. Norwich Union had a "fundamental responsibility to produce accurate actuarial reports upon which the employer was entitled to rely"; although the employer might have to accept some responsibility if it failed to notice a "blindingly obvious mistake". The mistake at issue did not fall into the "blindingly obvious" category.

The Deputy Pensions Ombudsman found that the employer would have made additional contributions into the scheme, had the actuarial valuation been accurate. However, this in itself did not constitute a loss to the employer, as it would have to have made the contributions in any event. Nevertheless, the lost investment returns from the additional contributions did constitute loss for which the employer should be compensated.

The Deputy Pensions Ombudsman rejected as speculation the submission that the employer would not have made additional benefit improvements had the true funding position of the scheme been known.

In addition to compensation for the lost investment returns (together with compound interest), the Deputy Pensions Ombudsman also awarded the employer a refund of its "reasonable" professional costs (legal and actuarial). The unusual decision to refund the employer's costs was influenced by the complexity of the matter and, in particular, by the fact that the employer "could not have presented its complaint… without professional assistance".