Pension Protection Fund · CAS-87352-D3M3

CAS-87352-D3M3

Ombudsman’s Determination Applicant Miss K (acting on behalf of Mr K’s estate)

Scheme Pension Protection Fund (PPF)

Respondent The Board of the Pension Protection Fund (the Board)

Outcome

Referral summary

Miss K has also complained that she suffered injustice. Miss K says she had to bear the costs of looking after Mr K and this had an adverse impact on her. This has not been accepted for investigation as it is not a relevant complaint of maladministration by the PPF. As applicable, a relevant complaint is defined in section 208(2)(a) of the Pensions Act 2004, as a complaint made “by a person who is or might become entitled to compensation under the pension compensation provisions………alleging that he has sustained injustice in consequence of maladministration in connection with any act or omission by the Board or any person exercising functions on its behalf.” As Miss K is not a person who is or might become entitled to compensation under the legislation governing the PPF, the PPFO is unable to accept Miss K’s complaint for losses she states she incurred personally.

Background information, including submissions from the parties The sequence of events is not in dispute, so I have only set out the salient points. I acknowledge there were other exchanges of information between all the parties.

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“(1) Compensation is payable in accordance with this paragraph where, under the admissible rules of the scheme, a person who is a deferred member immediately before the assessment date has not attained normal pension age, in respect of his rights to a pension under the scheme, before that date.

(2) If that person ( “the deferred member” ) survives to attain normal pension age in respect of that pension ( “the pension” ), he is entitled to periodic compensation in respect of the pension commencing at that age and continuing for life.

2 CAS-87352-D3M3 “Circumstances where a person shall be entitled to early payment of compensation

(1) The conditions subject to which a person may become entitled to—

(a) periodic compensation under paragraphs 11 or 15; or

(b) lump sum compensation under paragraphs 14 or 19,

of Schedule 7 to the Act before he attains normal pension age are those prescribed in the following paragraphs of this regulation.

(2) Those conditions are—

(a) that the person has given notice to the Board…, that he wishes to receive that compensation before he attains normal pension age;

(b) that on the date on which the compensation is to become payable early the person has attained—

(i) …, normal minimum pension age [NMPA] as defined in section 279(1) of the 2004 Act1;..”

• (i) before 6 April 2010, 50, • (ii) on and after that date but before 6 April 2028, 55, and • (iii) on and after 6 April 2028, 57…”

• In accordance with the PPF’s governing legislation, members may take early retirement from age 55. However, it appreciated that some members may not want to do so as early retirement factors applied, reducing the compensation payable.

1 Finance Act 2004. 3 CAS-87352-D3M3 • Unless a member had a protected retirement age of 55, it did not automatically send retirement illustrations to members until three months prior to their NRD.

• Mr K’s NRD was his 65th birthday. So, a retirement illustration was not issued prior to his death.

• A welcome pack was sent to Mr K on 16 June 2014. This included a booklet, which included details on early retirement, and a benefit statement.

• It received no communication from Mr K or a member of his family to advise it about the circumstances relating to his health, and if an early retirement illustration was required.

• Mr K did not have the mental capacity to claim his benefits, therefore the situation was beyond his control and was unfair.

• A welcome letter was sent to Mr K by the former Scheme’s administrators when he was transferred to the PPF in June 2014. It had checked and had no indication of any reason that it was not sent to Mr K. There were over 550 other members of the Scheme who transferred at the same time, and all were sent welcome letters. It had received no indication from other members that there were any issues with these letters being received.

• In addition to the welcome letters, it also worked with Capita in the summer of 2015, to ensure that all members were advised that the administration of the PPF was moving in-house from Capita to its own offices. An initial letter explaining the changes was sent out around June 2015. A second letter was sent around August 4 CAS-87352-D3M3 2015. Both letters were sent to all members. While a number were returned by the Royal Mail, the letters sent to Mr K were not returned and it had no reason to believe that the letters had not been received.

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• Mr K’s pension could have been accessed from age 55 but the Board says his compensation was set to a retirement (payment) age of 65. It is not clear who set this age. She has not seen any documentation from the PPF asking Mr K to choose which age he wanted to access his compensation. Mr K was very organised with his paperwork and finances. When she took over his records/finances there was not a single document in his files from the PPF for her to have contacted them.

2 The cover letter addressed to Mr K was not retained. 3 See paragraphs 8 and 9 above. 6 CAS-87352-D3M3 • She understands that if Mr K had asked for the early payment of his PPF compensation it would have been reduced, but at that time he had no home, no income and no mental capacity. So, while the amount may have been much less it was needed and would have had a huge positive impact.

• Her main point is that there was only one (supposed) contact by the PPF when Mr K had no mental capacity. Neither Mr K nor she received it, and they were not aware of the PPF’s existence prior to his death.

• If she had received the welcome pack, or the PPF had written to Mr K more than once, they could have claimed the early payment of his PPF compensation.

The Board’s position

• Mr K had no automatic entitlement to PPF compensation from age 55.

• It is required to pay PPF compensation in line with its governing legislation. This provides that compensation is payable from NPA.

• Mr K’s NPA was 65. As he died before reaching that age, his PPF compensation did not automatically come into payment.

• There is flexibility for a member to take their PPF compensation early, by giving written notice under Regulation 2 of the Pension Protection Fund (Compensation) Regulations 2005. The member must accept that their PPF compensation will be reduced by an early retirement factor, to reflect that it will be in payment for a longer period. This notice must be given by the member, except, for example, in cases where the member lacks mental capacity, it could be by an attorney under a Power of Attorney. However, the PPF received no such notice from Mr K or from an attorney on his behalf.

• The PPF’s governing legislation does not allow it to backdate or pay arrears in these circumstances, because the required conditions for putting the PPF compensation into payment were not met at the relevant time. It has no discretion in this matter. So, Mr K’s estate is not entitled to any backdating of PPF compensation or arrears.

• Regulation 3 and schedule 1 to the Pension Protection Fund (Provision of Information) Regulations 2005, require that PPF retirement communications (for example, including a PPF compensation forecast and retirement options) are issued to members 6-12 months before the member reaches NPA. As Mr K had not reached NPA, no PPF retirement communications were issued.

• There is no corresponding requirement for the PPF to write out to members at or shortly before they reach age 55. So, it has not failed to meet a statutory

7 CAS-87352-D3M3 requirement and there was no maladministration regarding PPF early retirement communications.

Adjudicator’s Opinion

• The referral, brought by Miss K, representing Mr K’s estate, was that the PPF failed to inform Mr K that he was able to take early retirement from age 55, and as a result he did not receive PPF compensation before he died.

• The PPF is a statutory compensation scheme and the amount, the terms and the conditions under which compensation is paid to members are set out in the Pensions Act 2004 and the Pensions Protection Fund (Compensation) Regulations 2005.

• The PPF has no discretion in the payment of compensation.

• The Adjudicator noted Miss K’s comment that it was not clear who set Mr K’s NPA of 65. The Adjudicator explained that this was Mr K’s NPA under the Scheme; and so, it was his NPA for compensation under the PPF.

• Miss K said that due to Mr K’s health condition he would not have been able to understand the welcome pack from the PPF or the 2013 and 2014 correspondence from Spence/the Trustees. She also said that the communications were not brought to her attention. But the PPF did not appear to have been made aware of Mr K’s condition prior to his death. When the welcome pack was issued, it had no reason to believe that it was not received by Mr K. It held Mr K’s correct home address, and the correspondence was not returned undelivered. Similarly, the correspondence sent by Spence in 2013 and 2014 was correctly addressed to Mr K.

• Miss K said the PPF only wrote to Mr K once. The Board disputed this. Nonetheless, there was no requirement for the PPF to contact Mr K more than it did as when Mr K died, he was several years away from his NPA and automatic entitlement to compensation.

• As specified under Regulation 2 of the Pension Protection Fund (Compensation) Regulations 2005, the member is required to give notice to the Board that they wish to receive their compensation before they attain NPA. Neither Mr K, nor an attorney acting on Mr K’s behalf, did that. The PPF was not obligated to contact Mr K shortly before he reached his NMPA of 55.

Miss K did not accept the Adjudicator’s Opinion and the referral was passed to me to consider. Miss K has provided her further comments, which I have considered, but they do not change the outcome, I agree with the Adjudicator’s Opinion. 8 CAS-87352-D3M3

Miss K’s further comments

Ombudsman’s decision

Where legislation is silent the legal convention is that the Interpretation Act 1978, should be considered in the first instance unless a contrary provision applies. Where

9 CAS-87352-D3M3 a document is to be given by post the Act provides that “the service is deemed to be effected by properly addressing, pre-paying and posting a letter containing the document and, unless the contrary is proved, to have been effected at the time at which the letter would be delivered in the ordinary course of post”.4

While Miss K says she did not see the letter, my view, on the balance of probability, is that it was sent.

While I very much empathise with Miss K, I do not uphold the referral and no further action is required by the Board.

Anthony Arter CBE

Deputy Pension Protection Fund Ombudsman 27 September 2023

4 Provision 7 ‘References to service by post’. 10