In this periodic round-up of complaints from employers, employees and pensioners to the Pensions Ombudsman, we look at a complaint about trustees’ failure to include information on the loss of enhanced redundancy benefits for a member prior to opting out of the pension scheme and a determination on the application of section 75 (employer debt) to the Baptist Ministers’ Pension Fund.

Perrett (PO-3750) Scheme Communications


The employer, RBS, told the complainant in 2010 that her place of work might be closed. She had worked for RBS for more than 30 years and was an active member of its pension scheme. She complained that the trustees, RBS Group Pension Services (GPS), did not take reasonable steps  to bring to her attention a term in thescheme rules which gave her the right to benefit from RBS’s voluntary early retirement plan. Having no knowledge of this term, she claims she decided to opt out after discussing her prospects with her line manager, who suggested that she might increase her take-home pay by ceasing pension contributions. In March 2011 she telephoned GPS to notify them she was considering opting out of the scheme.

She received an email from GPS the same month, which provided a link to online Learning Modules designed to help members inform themselves before making decisions about their pensions.

The modules deal with topics such as what happens when a member opts out of the pension scheme or on voluntary redundancy, as well as a general warning that some members may have specific terms which should have been communicated to them separately.

GPS subsequently sent the complainant a letter suggesting that she may wish to take independent  inancial advice and consider the consequences before returning the attached opt-out declaration. The letter listed five impacts of opting out, but did not mention that the decision may affect eligibility for an enhanced pension on voluntary redundancy.  The declaration itself referred, among other matters, to the loss of eligibility for “special early retirement plans” if she retired at the request of RBS.

Five months after signing and returning the opt-out declaration, the complainant discovered RBS was offering voluntary redundancy packages to those aged between 50 and 54. She wrote seeking reinstatement to the scheme but was told that GPS could not reverse the opt-out.

Attempts to deal with the issue through RBS’s internal dispute resolution procedure were unsuccessful.

In response to the Ombudsman’s investigation, RBS and the trustees said they cannot advise members, and that the company’s intranet offered information on early retirement and redundancy. They also pointed out that the complainant had been put on notice that her job was under review, and that this should have prompted her to consider her options. The wording of the declaration should also have prompted her to make further inquiries.


While there is no record of the conversations either between the complainant and her line manager, or the complainant and GPS, the Ombudsman was persuaded that:

  • The wording of GPS’s email suggests she asked about the full implications of opting out
  • The email presented the learning modules unambiguously as the best source of guidance on the implications of opting out

As to the modules, the Ombudsman took the view that these contained misleading information, by suggesting that variations from the standard terms would be communicated directly to members. The complainant therefore had no reason to believe that special terms and conditions applied in her case. Nor was she unreasonable in treating the modules as reliable guidance and failing to consult information on the employer’s intranet.

GPS’s failure to refer her to the intranet pages where information on early retirement was available amounted to a breach of the duty of care owed by RBS and the Trustees to members.

They could not rely on the wording contained in the opt-out declaration, because this did not make it sufficiently clear to members that enhanced pension rights on early retirement and voluntary redundancy would be lost. The phrase used in the declaration did not appear elsewhere and so it was not reasonable to expect members to interpret it in this way. In the absence of complete and accurate information, the opt-out declaration was unenforceable. As a result, the complainant must be reinstated to the scheme and given an undiscounted pension based on her years of service.


Trustees bear the ultimate responsibility for ensuring that members have easily accessible, clear and accurate information about their options on retirement – including the effect of potential redundancy. Where a decision to opt out will deprive a member of their right to an enhanced pension should they subsequently be made redundant, this needs to be anticipated by administrators and communicated in clear and simple terms. To be confident that members can make informed decisions, employers, trustees and administrators should:

  • Ensure that the correct terms are used consistently in guidance literature. Providing complete and accurate information is especially important where there may be special benefits for certain classes of member
  • Ensure that sources of information are easily accessible and interlinked – either by hyperlinks to relevant content on websites or by reference to policy documents
  • Ensure that those dealing with opt-out inquiries are aware of any potential redundancy risks as and when they arise
  • Take reasonable steps to bring all relevant information to members’ attention – responsibility to resolve ambiguities in guidance and keep members updated rests with the provider
  • Take care to present information in a way that makes it clear to members they may need to seek additional guidance or external advice

Albemarle Baptist Church (PO-774): section 75 debt


The Ombudsman was asked to consider whether the Trustee of a church pension scheme should have warned one of the individual churches that it could be liable to pay its share of employer debt.

In March 2011, the Trustee of the Baptist Ministers’ Pension Fund (the Fund) and the Baptist Union of Great Britain sent a bulletin to all churches informing them of recent legal developments that had serious implications for the Fund. Firstly, the decision in PNPF Trust Co Ltd v Taylor [2010] PLR 261(Pilots’ case) clarified the status of church ministers: having been ministers in a “qualifying office”, they were now to be regarded as employees and their churches were employers.

Secondly, this decision laid the churches open to the operation of section 75 of the Pensions Act 1995 and the Occupational Pension Funds (Employer Debt) Regulations 2005. The effect was that, whenever a minister left a church which employed no other active members, an “employment cessation event” was deemed to have occurred, according to the rules for multi-employer schemes (which now applied to the Fund).

If the Fund was in deficit on this date, section 75 requires the departing employer to pay their share of the difference between the scheme’s assets and the liabilities valued as if annuities were bought for all members (buy-out basis). It had been calculated that a debt would therefore be owed by approximately 400 churches where a cessation event was thought to have occurred since 2005 with potentially “disastrous results for those churches and for the denomination as a whole”.

However, the Pensions Regulator, the PPF and the Trustee had agreed an arrangement whereby churches which expected they might in future participate in the Fund again would be deemed to have had a “non-genuine” cessation and the debt would not be processed as long as the church agreed to make shortfall contributions in future.

One of these non-genuine cessation events occurred at Albemarle Baptist Church in November 2011, when a part-time minister resigned due to ill health. The Trustee wrote to the church asking it to pay shortfall contributions. The church brought a complaint against the Trustee and the Union, arguing that the Trustee should have understood the implications of section 75 earlier, and should therefore have advised it of these in 2007 when it became a participating employer. It says it would have made alternative arrangements.


Because under the terms of this scheme, the minister was the one who applied to join the Fund with the application considered by the Trustee, the minister’s joining was not strictly at the church’s option. It was not strictly relevant therefore whether the church understood the full implications of participating in the Fund as it had no choice but to do so.

However, the Ombudsman was satisfied that the Trustee was under no obligation to warn the church that circumstances put it at risk of triggering a cessation event and incurring debt liabilities. One of the factors in this decision was the fact that the legal status of ministers was not settled until 2010. Following the decision in PNPF Trust Co Ltd, the Trustee took legal advice on this and amended the Fund rules accordingly.

It was only upon learning the full implications of legal developments after the Pilots’ case that any obligations arose in relation to warning churches of potential liabilities under section 75. Before this, legal uncertainty meant that, even if the Albemarle church had made inquiries prior to becoming a participating employer, the advice would have been inconclusive.

In notifying Albemarle that it could either pay its share of the debt or agree to make shortfall contributions, the Trustee had correctly interpreted the employer’s legal obligations.


The case has a number of facts that are particular to it, especially the circumstances surrounding the individual ministers being “employed” by their individual churches, and so does not involve a typical scheme. However, it does highlight the importance for employers who have a defined benefit scheme to understand that they could be faced with an employer debt and most importantly to understand the circumstances in which that debt might be triggered.

The Ombudsman noted the difficulties that the individual church faced, as an institution with modest resources. Like the Wedgwood museum case before it, it is hard not to feel sympathy for the parties having to deal with the strict requirements of the employer debt legislation.