Teachers Pension Scheme · CAS-30170-T9C1

CAS-30170-T9C1

Ombudsman’s Determination Applicant Mr G

Scheme Teachers' Pension Scheme (TPS)

Respondent Teachers' Pensions (TP)

Complaint Summary

Summary of the Ombudsman’s Determination and reasons

1 Meaning the overpayment is repaid directly to the scheme, rather than being deducted from any future

instalments of pension (which would not be available in this case, as Mr G’s spouse’s pension from the TPS has now come to an end). 2 Regulation 114 of the 2010 Regulations is set out in Appendix 1. 1 CAS-30170-T9C1 Detailed Determination Material facts

3 The 1997 Regulations were later revoked by the 2010 Regulations (see Regulation 138(3) of the 2010

Regulations and Schedule 12 to the 2010 Regulations) from 1 September 2010. There are however saving provisions under the 2010 Regulations in Schedule 13 Part 2, so that anything done or having effect as if done under or for the purposes of a provision of the 1997 Regulations has effect, if it could be done under or for the purposes of the corresponding provision of the 2010 Regulations as if done for the purposes of that corresponding provision. 2 CAS-30170-T9C1

an adult dependant remarries/co-habits or enters into a civil partnership they must inform us with full details immediately. An adult dependant’s pension entitlement ceases if he or she remarries or lives with another person as husband and wife. In this event, the pensioner must inform us immediately to prevent any overpayment occurring.”

On 6 December 2016, TP wrote to Mr G and said in summary:-

4 TP has provided evidence to The Pensions Ombudsman that Mr G was sent a copy of Leaflet 450 following the death of his first wife.

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5 These sections of the Limitation Act are detailed in the Appendix 2. 6 Mr G provided a detailed summary of what he believed due diligence entailed, and what he expected TP’s

due diligence in relation to the TPS to have been. 5 CAS-30170-T9C1

7 PO-11441

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8 Included in the information TP sent to Mr G during this period was details of the number of overpayments

pensioners had received up to 2014. 9 Mr G referred to the previous PO’s Determinations of PO-11441 and PO-11429.

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10 Mr G provided copies of the TPAD and the Declaration to TPO.

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11 A table showing this information is detailed in Appendix 3. TP explained that the figures in the table were

compiled in-year for each year during the period and have not been retrospectively adjusted based on later discovery of remarriage cases. The figures reflect both UK and overseas cases, albeit the figures predominantly reflect the UK position, given the larger population of domestic pensioners and beneficiaries. 9 CAS-30170-T9C1

12 Sometimes similar wording was used. 13 TP explained that the heightened risk was essentially for two reasons. These were: (i) there was a higher

risk of TP being notified late or not at all of change of circumstances or pensioners who had moved abroad; and (ii) TP could mitigate such risk for UK members as TP could match its information with UK government and public sector databases as a further means of identifying whether a UK pensioner had died. 10 CAS-30170-T9C1

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Preliminary Decision

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Had TP combined an improved version of the TPAD with its already developed and paid for annual newsletter infrastructure for domestic members, this could have been done very comprehensively and relatively cheaply as early as 2000, and years before he re-married. It would have kept costs to a minimum because it would have been part of the already pre-committed newsletter production and distribution cost each year. It would have been addressed to every TP member at their home, with specific and personalised documentary instructions included to make sure that a complete and comprehensive document was returned to TP on an annual basis that was E30 compliant. TP’s failure to do so meant that its claim to recover the overpayments was out of time.

The Declaration was not an addition to, or even a replacement for, the failed newsletter-based process from the reasonable diligence perspective. It was a completely new approach for domestic members and filled a void.

The PO had not produced any analysis, or realistic and informed evidence, he said, to confirm that “exceptional or excessive measures”, however defined, were necessary to implement the Declaration before 2014.

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The cause of action will generally accrue on the date the overpayment was made and the cut-off date (Cut-Off Date), when the ‘clock stops running’ for limitation purposes, will be the date that TP acknowledges that it will defend the applicant’s complaint. 17

However, the normal six-year limitation period does not begin to run in cases of mistake until the plaintiff has discovered or could, with reasonable diligence, have discovered it.18

14 Recovery by ‘setting off’ the overpayment against future payments of pension is not available in this case

as there is no ongoing pension to set off the overpayments against. 15 Section 5 of the Limitation Act. 16 Section 9 of the Limitation Act. 17 Webber v Department of Education [2016] 102 PBLR (024). 18 Section 32(1) of the Limitation Act.

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“The question is not whether the plaintiffs should have discovered the fraud sooner: but whether they could with reasonable diligence have done so. The burden of proof is upon them. They must establish that they could not have discovered the fraud without exceptional measures which they could not reasonably have been expected to take…the test was how a person carrying on a business of the relevant kind would act if he had adequate but not unlimited staff and resources and was motivated by reasonable but not excessive sense of urgency.”

“the concept of “reasonable diligence” carries with it “the notion of a desire to know, and indeed, to investigate.”

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“exceptional measures which they could not reasonably have been expected to take…the test was how a person carrying on a business of the relevant kind would act if he had adequate but not unlimited staff and resources and was motivated by reasonable but not excessive sense of urgency.”

“the concept of “reasonable diligence” carries with it “the notion of a desire to know, and indeed, to investigate.”

I consider, there was a clear ‘desire to know’ on the part of TP whether payments were still due to individuals (and I struggle to see how it can be argued that was not the case).

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19 Indeed, one need only look at recent press coverage of the impact of the Declaration to understand why there could have been a reluctance to institute more intrusive investigations: see, for example, the Guardian from 10 February 2024: ‘Humiliating’ pension process upsets partners of retired UK teachers who have died | Pensions | The Guardian. 19 CAS-30170-T9C1

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“When it comes to estoppel by representation or promissory estoppel, it seems to me very unlikely that a claimant would be able to satisfy the test of unconscionability unless he could also satisfy the three classic requirements. They are (a) a clear representation or promise made by the defendant upon which it is reasonably foreseeable that the claimant will act, (b) an act on the part of the claimant which was reasonably taken in reliance upon the representation or promise, and (c) after the act has been taken, the claimant being able to show that he will suffer detriment if the defendant is not held to the representation or promise. Even this formulation is relatively broad brush, and it should be emphasised that there are many qualifications or refinements which can be made to it.”

“… the principles applicable to the assertion of an estoppel by convention arising out of non-contractual dealings … are as follows:

i) It is not enough that the common assumptions upon which the estoppel is based is merely understood by the parties in the same way. It must be expressly shared between them.

ii) The expression of the common assumption by the party alleged to be estopped must be such that he may properly be said to have assumed some element of responsibility for it, in the sense of conveying to the other party an understanding that he expected the other party to rely upon it.

iii) The person alleging the estoppel must in fact have relied upon the common assumption, to a sufficient extent, rather than merely upon his own independent view of the matter.

iv) That reliance must have occurred in connection with some subsequent mutual dealing between the parties.

v) Some detriment must thereby have been suffered by the person alleging the estoppel, or benefit thereby have been conferred upon the person alleged to be estopped, sufficient to make it unjust or unconscionable for the latter to assert the true legal (or factual) position.”

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20 These considerations have been summarised in Appendix 4.

25 CAS-30170-T9C1 Non-financial injustice

Determination

Dominic Harris

Pensions Ombudsman

26 June 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 Sate 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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“5 Time limit for actions founded on simple contract

An action founded on simple contract shall not be brought after the expiration of six years from the date on which the cause of action accrued.

…

32 Postponement of limitation period in case of fraud, concealment or mistake.

(1) Subject to subsection (3) below, where in the case of any action for which a period of limitation is prescribed by the Act, either-

(a) the action is based upon the fraud of the defendant; or

(b) any fact relevant to the plaintiff’s right of action has been deliberately concealed from him by the defendant; or

(c) the action is for relief from the consequences of a mistake;

the period of limitation shall not begin to run until the plaintiff has discovered the fraud, concealment or mistake (as the case may be) or could with reasonable diligence have discovered it…”

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Volume of Cases Total Value of Average Year invoiced overpayments overpayment value

2004 102 £133,620 £1,310

2005 116 £119,138 £1,027

2006 100 £151,561 £1,516

2007 89 £66,043 £742

2008 117 £207,159 £1,771

2009 109 £131,166 £1,203

2010 122 £212,843 £1,745

2011 99 £315,497 £3,187

2012 76 £221,752 £2,918

2013 122 £290,638 £2,382

2014 166 £743,001 £4,476

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“A4.112. When deciding on appropriate action, taking legal advice, organisations should consider:

• the type of overpayment

• whether the recipient accepted the money in good or bad faith

• the cost-effectiveness of recovery action (either in house or using external companies). Advice that a particular course of action appears to offer good value may not be conclusive since it may not take account of the wider public interest

• any relevant personal circumstances of the payee, including defences against recovery

• the length of time since the payment in question was made; and

• the need to deal equitably with overpayments to a group of people in similar circumstances.

…”

“Public sector organisations may waive recovery of overpayments where it is demonstrated that recovery would cause hardship. But hardship should not be confused with inconvenience. Where the recipient has no entitlement, repayment does not in itself amount to hardship, especially if the overpayment was discovered quickly. Acceptable pleas of hardship should be supported by reasonable evidence that the recovery action proposed by the paying organisation would be detrimental to the welfare of the debtor or the debtor's 30 CAS-30170-T9C1 family. Hardship is not necessarily limited to financial hardship; public sector organisations may waive recovery of overpayments where recovery would be detrimental to the mental welfare of the debtor or the debtor's family. Again, such hardship must be demonstrated by evidence.”

In relation to good faith Managing Public Money says: “A4.11.5. The decision on how far recovery of an overpayment should be pursued in a particular case will be influenced by whether the recipient has acted in good or bad faith:

• where recipients of overpayments have acted in good faith, e.g. genuinely believing that the payment was right, they may be able to use this as a defence (though good faith alone is not a sufficient defence);

• where recipients of overpayments have acted in bad faith, recovery of the full amount overpaid should always be sought.

A4.11.6. Recipients may be inferred to have acted in bad faith if they have wilfully suppressed material facts or otherwise failed to give timely, accurate and complete information affecting the amount payable. Other cases, e.g. those involving recipients’ carelessness, may require judgement. And some cases may involve such obvious error, e.g. where an amount stated is very different from that paid, that no recipient could reasonably claim to have acted in good faith.

A4.11.7. In forming a judgement about whether payments have been received in good faith, due allowance should be made for:

• the complexity of some entitlements, e.g. to pay or benefits

• how far the payment depended on changes in the recipient’s circumstances of which he or she was obliged to tell the payer

• the extent to which generic information was readily available to help recipients understand what was likely to be due.”

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