Modernity, sympathy but no benefit for the member’s spouse.

Martha Quinn

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A more modern approach to complaints handling from the Pensions Ombudsman

Data protection is a big issue. It is not just at the forefront of pension scheme trustees and administrators thoughts.  Embracing modernity and the prevailing approach to increased protection of personal information, the Pensions Ombudsman has announced that it will in future anonymise all new published decisions.

This will involve removing the name and other personal data of the person making the complaint from its published decisions, unless it considers it essential for understanding or in the wider public interest.

The new approach will include publishing determinations after a complainant has appealed against an initial adjudicator’s decision and publishing adjudication decisions that are considered to be of interest even if they don’t lead to an eventual Ombudsman’s determination.

A plea to embrace modernity

Embracing modernity has its limits however.  It has not helped the spouse of one member of the Signet Group Pension Scheme who wanted the trustees to provide her with benefits on the death of her husband under the scheme.

After exhausting the scheme’s internal dispute resolution procedure, and TPAS finding in favour of the scheme trustees, she complained to the Pensions Ombudsman.

She argued that the scheme rules were unfair and did not reflect modern society.  Her assertion was that the trustees should exercise their discretion, waive the requirements in the scheme rules and give her a benefit.

Quirky rules but validly applied 

The scheme’s death benefit rules were unusual.  In order to qualify for a spouse’s pension the spouse had to be married to the scheme member not necessarily at the date of his death but at the earlier of the member’s normal pension date or the date the member ceased to be an employee of the company.

In this case, although the widow had been the spouse of the member at the date of his death and had been cohabiting partner for many years before that, for the purpose of entitlement to a spouses pension  the widow had not been married to the member at the relevant time.

The rules also provided the trustees with discretion to pay a lump sum death benefit  but only if the member died within five years of his pension commencing. The member had died more than five years after his pension started.

Agreeing with the initial Ombudsman adjudicators decision, the Pensions Ombudsman dismissed the complaint. The Ombudsman found that under the scheme rules the trustees had no discretion to pay a pension to the spouse and likewise no entitlement to the lump sum death benefit arose.

Sympathy but no money

While expressing enormous sympathy for the spouse’s position the Pensions Ombudsman said that  determinations based on “fairness” were not part of its remit. Its role was to decide whether there had been maladministration or a breach of law.

The Rules are the Rules

This decision is yet another example of the devil being in the detail of the scheme rules.  They may not be modern, they may be culturally out of date and even unfair, but none of that matters.  So long as they are legally compliant and the trustees apply them properly, that is what matters.

Although processes change the real fundamentals tend to remain the same. Sympathy and modernity was not enough to provide a cash benefit for the spouse.

Martha Quinn

Post by Martha Quinn

Martha is a pensions lawyer with almost 20 years of experience with major law firms and pension practices in London and Scotland.