Teachers Pension Scheme · CAS-26661-R4X7

CAS-26661-R4X7

Ombudsman’s Determination Applicant Mrs L

Scheme Teachers’ Pension Scheme (the Scheme)

Respondent Teachers' Pensions (TP)

Outcome

Complaint summary

Background information, including submissions from the parties

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• The Employer had notified TP of changes which had affected the calculation of her retirement benefits. Unfortunately, her lump sum had been overpaid by £702.16 and her pension had been overpaid by £1,800.15 (net).

• Her total pensionable service had increased from 18 years and 3 days to 18 years and 149 days.

• Her best average salary had decreased from £31,512.51 to £30,111.58.

• Her best average salary period had changed. This affected “the amount of pensions increase payable.”

1 TP has no record of whether it took any action at the time.

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2 Mrs L obtained this information from her My Pension online account.

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3https://assets.publishing.service.gov.uk/media/64c383ccf92186001486670d/Managing_Public_Money_- _May_2023_.pdf

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4 TP said 31 December 2004 in the letter but that was likely to be an error as Mrs L’s last day of service was 31 December 2003. 5 TP included a copy of the Statement of Service with this letter.

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Adjudicator’s Opinion

6 TP has provided a table detailing the PI applied to Mrs L’s revised pension. This is detailed in Appendix 2. 7 Regulation 114 of the 2010 Regulations is set out in Appendix 1.

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8 Lipkin Gorman v Karpnale Ltd [1991] 2 AC 548 9 See Chapter 27.1 of Goff & Jones, The Law of Unjust Enrichment for a detailed review of the case law.

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TP maintained that Mrs L would have received a Statement of Service with the May 2010 Letter detailing her period(s) of pensionable service. However, Mrs L said that she did not receive this and that it was only when she accessed her benefit statement online in 2017, that she became aware of the discrepancy in her pensionable service.

In the Adjudicator’s view, on the balance of probabilities, Mrs L did not receive the Statement of Service in May 2010. Based on the queries Mrs L raised with TP, if she had received the Statement of Service she would more likely have studied it and

10 Philip Collins Ltd v Davis [2000] 3 All ER 808. A case where two itinerant musicians with a “relaxed and philosophical propensity to overspend their income escaped liability to the extent that increases in their everyday outgoings were referable to their receipts from the claimant.” 11 National Westminster Bank plc v Somer UK Limited [2002] 12 Niru Battery Manufacturing Co v Milestone Trading Ltd (No 1) [2002] EWHC at 135].

10 PO-27798 contacted TP at that time to query any discrepancy in her service. So, the Adjudicator was satisfied that Mrs L only became aware of the discrepancy in 2017, and contacted TP at the earliest opportunity.

Further, Mrs L’s online benefit statement showed that a period of pensionable service was missing from her total service. It was the Adjudicator’s view that it would have been more reasonable for Mrs L to have inferred from that information that her retirement benefits could potentially have been understated.

Consequently, it was the Adjudicator’s view that Mrs L received the overpayment in good faith and did not have actual or ‘Nelsonian knowledge’ that she was being overpaid. The Adjudicator then considered whether Mrs L satisfied the other requirements of the good faith test.

The Adjudicator pointed out that if Mrs L satisfied all the requirements for a change of position defence, TP would not be required to reinstate Mrs L’s pension to the inflated level. The defence would only relate to TP’s recovery of the overpayment of past pension benefits.

The overpaid lump sum

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The Adjudicator was unable to identify that the necessary elements for a contract exists in this case, namely, offer, acceptance, consideration, and the intention to enter into legal relations. The evidence did not support the view that TP intended to enter into legal relations in addition to those which already existed due to Mrs L’s status as a retired member of the Scheme.

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“(1) Where a person is entitled to a pension under an occupational pension scheme or has a right to a future pension under such a scheme -

(a) the entitlement or right cannot be assigned, commuted or surrendered,

(b) the entitlement or right cannot be charged or a lien exercised in respect of it, and

(c) no set-off can be exercised in respect of it,

and an agreement to effect any of those things is unenforceable.”

“In the case of a person (“a person in question”) who is entitled to a pension under an occupational pension scheme, or has a right to a future pension under such a scheme, subsection (1) does not apply to any of the following, or an agreement to effect any of the following:

[…]

(f) subject to subsection (6), a charge or lien on, or set-off against, the person in question’s entitlement, or right, for the purposes of discharging some monetary obligation due from the person in question to the scheme arising out of a payment made in error in respect of the pension.”

“Where a charge, lien, or set-off is exercisable by virtue of subsection 5(d) (e) or (f) –

(a) its amount must not exceed the amount of the monetary obligation in question, or (if less) the value (determined in the prescribed manner) of the person in question’s entitlement or accrued right; and

13 PO-27798 (b) the person in question must be given a certificate showing the amount of the charge, lien or set-off and its effect on his benefits under the scheme,

and where there is a dispute as to its amount, the charge, lien or set-off must not be exercised unless the obligation in question has become enforceable under an order of a competent court or in consequence of an award of an arbitrator or, in Scotland, an arbiter to be appointed (failing agreement between the parties) by the sheriff.”

13 Burgess v BIC UK [2018] 054 PBLR (040) 14 The Pensions Ombudsman v CMG Pension Trustees Ltd and CGI IT UK Limited [2022] EWHC 2130 (Ch)

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Both Mrs L and TP confirmed that they accepted the Adjudicator’s Opinion.

Ombudsman’s decision

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Directions

Dominic Harris

Pensions Ombudsman

22 April 2024

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“Cessation, etc. of benefits where no entitlement

114. – (1) This regulation applies where after paying a benefit the Secretary of State determines that there was no entitlement to the benefit or there is no longer an entitlement to the benefit.

(2) The Secretary of State may-

(a) cease to pay the benefit;

(b) withhold the whole or any part of the benefit;

(c) in the case of a payment made when there was no entitlement to the benefit recover any such payment.”

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Effective Excess Post 88 Pre 88 NIMOD Total pension Gross date pension GMP GMP (per annum) monthly pension 09/04/2018 £8,551.51 £873.60 £825.24 £22.04 £10,228.31 £852.36 08/04/2019 £8,756.75 £894.40 £825.24 £22.57 £10,453.82 £871.16 06/04/2020 £8,905.61 £909.48 £825.24 £22.95 £10,617.38 £884.79 12/04/2021 £8,950.14 £914.16 £825.24 £23.06 £10,666.48 £888.88 11/04/2022 £9,227.59 £941.72 £825.24 £23.77 £10,970.78 £914.24 10/04/2023 £10,159.58 £969.80 £825.24 £26.17 £11,928.15 £994.02

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