In the case of Parker the Deputy Pensions Ombudsman (DPO) held it was not necessary for a member’s final pensionable salary under the UK Turner and Newall Retirement Benefit Scheme to reflect the member’s USA earnings from when the member transferred employment to a USA company within the same group.
This case concerned an applicant who had transferred from the UK to the USA to work for a company in the same group. The applicant became a deferred member of the UK scheme and a member of the USA scheme when he transferred to the USA. The applicant was later made redundant. Prior to being made redundant the applicant was re-employed with the UK company to allow him to become a member of the UK scheme and benefit from continuous employment under the UK scheme.
The applicant complained that his final pensionable salary under the UK scheme rules was incorrectly calculated as it did not reflect his USA earnings. He also argued that the final salary was contrary to an agreement made when he transferred from the UK to the USA and contrary to a separation agreement made upon his being made redundant. The applicant further complained that he had not been informed about the services of the Pensions Advisory Service (TPAS) and that Pensions Ombudsman and this had led him to incur unnecessary legal cost in the USA.
The DPO held that it was within his jurisdiction to investigate the complaint although the narrow question of the claimant’s proper salary under his employment contract was an employment matter and so outside his jurisdiction . The DPO further held that the fact that the complaint had already commenced legal proceedings in the USA did not deter him from investigating the complaint. He interpreted the Pensions Schemes Act 1993 as only applying to limit his jurisdiction where proceedings had been commenced in “any English court”.
The DPO held that, on the facts of the case, the assurances made to the applicant did not amount to a binding promise to provide benefits calculated in a particular way when the applicant transferred to the USA.
The DPO determined that there was nothing innately wrong or unreasonable in the assumptions that were used to calculate the notional UK salary when attributing a UK salary to the applicant under the UK scheme. In calculating the UK final salary this did not need to follow the applicant’s USA salary.
The DPO acknowledge that the figures provided by his USA employers prior to the applicant agreeing the separation agreement were arguably misleading. However, these figures were provided by the US employer and their actions could not impose liability on the UK trustees.
The DPO saw no basis for finding that failure to inform the applicant of the services from TPAS and the Pensions Ombudsman led the applicant to commence litigation in the USA and incur legal costs he otherwise would not have done. He considered an apology to be adequate redress.