Happy New Year and welcome to our latest CMS Pensions Ombudsman Update. Our regular Updates are designed to help you get to grips with the Ombudsman’s thinking, to keep track of decisions on individual topics and to identify underlying trends. This month we look at new determinations of interest, the latest High Court appeals, and the Ombudsman’s Corporate Plan.
Happy New Year and welcome to our latest CMS Pensions Ombudsman Update. Our regular Updates are designed to help you get to grips with the Ombudsman’s thinking, to keep track of decisions on individual topics and to identify underlying trends. This month we look at new determinations of interest, the latest High Court appeals, and the Ombudsman’s Corporate Plan. Another scammed member reinstated In our October 2018 Update we examined the Ombudsman’s decision to order a pension scheme to reinstate a former member who had transferred to a pension liberation vehicle. Lightning has now struck twice, with determination PO-21489 Mrs H (28 August 2019). Mrs H was a deferred member of the Local Government Pension Scheme (LGPS) who transferred to a suspected liberation scheme in November 2013. It was now likely that all or most of the transferred funds were lost. She complained that the Council should not have let her transfer out of the LGPS. The Council claimed that it had no choice but to follow the member’s request, but the Ombudsman analysed the situation differently. The statutory transfer right only applied where a member would receive “transfer credits” in the new scheme, meaning rights relating to an “earner”. In fact, when the transfer took place Mrs H was living off state benefits and had no employment earnings. The Hughes v Royal London case in 2016 held that earnings from any source (not just employment under the receiving scheme) could make a member an “earner”. However, the Court did not hold that there was a statutory right where the member was not in receipt of earnings at all. The Council had therefore wrongly construed its discretion to allow a transfer as an obligation to do so. In the Ombudsman’s view the Council had suspected a scam at the time, and in light of the member’s circumstances it should have been aware there was an ‘earnings’ problem and made further enquiries. The Ombudsman was satisfied that, were it not for the Council’s maladministration, the member would not have transferred out. He was unmoved by the Council’s contention that the transfer happened “in the fairly early days of pension scams”: the issue of Pensions Regulator Scorpion guidance in February 2013 had marked a point of considerable change in the due diligence required of transferring schemes. The Ombudsman directed the Council to reinstate the member in the LGPS, allowing for the lump sum she had received from the liberation scheme but adjusting for posttransfer revaluation. Trustees justified in response to member’s climate change requests In PO-27469 Mr D (15 August 2019), the member sought disclosure of a number of documents about how the scheme (whose employer was a prominent oil company) was dealing with climate change issues. The trustee chair and the secretary to the Inv
Welcome to the latest regular Pensions Ombudsman Update from the CMS Pensions Team.
The Pensions Ombudsman resolves hundreds of cases every year which are not only important for the parties concerned, but can shape wider industry practice. However, the sheer volume of cases dealt with can make it hard to keep track of decisions on individual topics, and underlying trends. Our Updates are designed to help you to get to grips with the Ombudsman’s thinking.
Please click here to view the Update.