Teachers Pension Scheme · CAS-29019-Q6T4

PO-39940

Ombudsman’s Determination Applicant Mr S

Scheme Teachers' Pension Scheme (the TPS)

Respondent Teachers' Pensions (TP)

Complaint Summary

Summary of the Ombudsman’s Determination and reasons

1 Teachers' Pensions PO-39940

Detailed Determination Material facts

The TPS is administered by TP on behalf of the Department for Education (the DfE). It has specific administrative responsibilities, including paying pension benefits in accordance with the regulations that govern the TPS.

Reference to “Manager” in this Determination means TP, in its capacity as the administrators of the TPS.

1.

(3) Unless the Secretary of State determines otherwise in the particular case, and subject always to regulation E1(3)(c) and (d) (guaranteed minimum pension for surviving spouse), an adult pension is not payable during or after any marriage or period of cohabitation outside marriage

period of cohabitation outside marriage

1 The 1997 Regulations were later revoked by the Teachers' Pensions Regulations 2010 (the 2010

Regulations) with effect from 1 September 2010. There are however saving provisions under the 2010 Regulations in Schedule 13 Part 2. The saving provisions mean 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 PO-39940

A widow(er)’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.”

The version of Leaflet 450 in force at the relevant time, which was dated November 2003, included the following wording:

“Duration of benefits [original emphasis]

Spouse only Spouse’s pension payable for life unless spouse re- marries or co-habits. The pension must then stop. The spouse’s pension will be restored following the death of the second husband/or cohabitee provided that the widow(er) is not in receipt of a pension from the second marriage or cohabitation which is higher than the first.”2

with the end of year (P60) certificate The 2007 newsletter contains the following warning:

“Please inform us:

+…If you receive a pension by virtue of being the dependant of a deceased member and subsequently enter into a new partnership

…

2 TP has provided evidence that Mr S was sent a copy of Leaflet 450 at the time.

3 PO-39940 Failure to notify Teachers’ Pensions of such changes may result in an overpayment of pension which must be recovered [original emphasis in bold]”.

The Pensions Ombudsman (TPO is aware from past cases that more recent Newsletters emphasise the importance of TP having up to date information. For example, the April 2016 Newsletter contains the following warning:

“Important:

To ensure the correct pension is paid to you, it’s vital that we have your most up to date information on our records”.

Please tell us:

If you remarry, enter a civil partnership or cohabit and you are in receipt of a spouse’s, civil partner’s or nominated financial dependant’s pension, provided by a person who retired or ceased pensionable service before 1 January 2007...[original emphasis].”

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.”

Cessation, etc. of benefits where no entitlement, provides that:

“ 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.

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

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““it had now received a response from TP, TP had confirmed to L&G that the benefits could be paid to him, in line with its procedures””.

The updated bank account

“…I rang TP to inform them of my new address and provide them with details of my new joint bank account. I told them the reason for these changes was in preparation for my re-marriage in December 2007 and I explained that although my fiancée, …, was the primary account holder ...this would from 5 PO-39940 now [on] be my only bank account [.] I needed my next TP pension payment to be paid into it.

I was not asked to provide TP with a bank statement but had I been, [my fiancée] and I would have asked the bank to send TP one asap”.

TP has also provided TPO with a copy of a letter that was issued to Mr S on 22 August 2007 (the August Letter). It confirms the changes TP made to Mr S’ pension record. The August Letter is set out at Appendix 1.

On 1 December 2007, Mr S married his fiancée. However, the widower’s pension continued in payment.

The December Telephone Call

On 7 December 2007, Mr S has said that he telephoned TP and enquired about contingent benefits attached to his widower’s pension (the December Telephone Call). He asked whether his new wife (Mrs S) would be eligible for a spouse’s pension in the event of his death. He says TP informed him that she would not be eligible for a spouse’s pension.

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“Spoke to BR Pensions 7/12/07. [Mrs S] gets 50% of my pension on my death as she is no more than 10 years younger than me. Had she been > 10 years younger she would have < 50% on sliding scale. In the event of my death [Mrs S should contact BR Pensions and provide the following documentation]:-

(i) Death Cert

(ii) Marriage Cert

(iii) [Mrs S’] Birth Cert”

Neither TP nor Mr S have a contemporaneous record of the December Telephone Call. TP has advised TPO that prior to February 2009, it did not record telephone calls. However, any telephone calls Mr S would have made to TP would have been noted on his pension record, unless the enquiry was of a general nature.

“…from the payment due on 7 March 2008 your widower’s pension will commence and will be payable for the duration of your lifetime.”

New verification methods

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Hardship

On 19 March 2019, Mr S complained to TPO that TP had failed to communicate the rules governing eligibility for the spouse’s pension.

On 3 May 2019, TP provided a formal response to TPO. 9 PO-39940 Summary of Mr S’ position

Good faith

Change of position

10 PO-39940

Hardship

The alleged maladministration

Summary of TP’s position

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The Preliminary Decision

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The Pensions Ombudsman’s position on overpayment cases – public service schemes

4 Confirming their cause of death.

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5 In England and Wales this will normally be the County Court. 6 Pensions Ombudsman v (1) CMG Pension Trustees Limited and (2) CGI IT UK Limited [2023] EWCA Civ

1258 (CA) at paragraphs 153-160. However, it was announced in the King’s speech in July 2024 that the law will be changed so that TPO will be treated as a competent court for the purposes of section 91 of the 1995 Act. Once the new legislation is in force this will reverse this aspect of the CMG decision. 7 Pensions Ombudsman v (1) CMG Pension Trustees Limited and (2) CGI IT UK Limited at paragraph 56.

15 PO-39940 Legal analysis and conclusions

Future pension payments

Past overpayments

8 The GMP checker is a service that a pension scheme can use to obtain a calculation of a member’s GMP. 9 In Westminster CC v Heywood (No 1) [1998] Ch 377, at 392G - 393F it was confirmed that a local authority

cannot, under the guise of a settlement agreement, enter into a binding commitment which it has no power to make. In East Sussex CC v Jacobs [2004] OPLR 243, at sections 16–17, and Secretary of State for Scotland v Turner [2003] SC 525, at section 36, it was held that the Ombudsman has no power to order public authorities to make pension payments that they have no lawful power to make. See also the obiter comments in Police and Crime Commissioner v Butterworth at [35] and [36].

16 PO-39940 Repayment claim

Change of position

Good faith

10 Lipkin Gorman (a firm) v Karpale [1991] 2 AC 548 as per Lord Goff at paragraph [580C ]. Lord Goff set out this principle in general terms and the courts have subsequently developed principles about where such a defence applies. 17 PO-39940

Detriment

11 See Webber v Department for Education, Teacher's Pensions [2012] EWHC 4225 (Ch) and Webber v

Department of Education which applied the earlier test in Niru Battery Manufacturing Co v Milestone Trading Ltd [2002] EWHC 1425 (Comm) in a pensions context. 12 See for example Abouh Ramah v Abacha [2006] EWHC Civ 1492 Armstrong DLW GmBH v Winningham

Networks Ltd [2012] EWHC 10 (Ch) at [110]. 13 See Scottish Equitable v Derby [2000] PLR 1 (CA) at [33]. 14 Philip Collins v Davis [2000] 3 All ER case (cited with approval in Scottish Equitable Derby).

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Causation

Applying the good faith test: annual

standard

The annual

I expect members to read documents and communications they receive concerning their pension carefully. If members are asked to notify the trustees or managers about a change in circumstances (and this is prominently drawn to their attention) it is reasonable to expect them to do so. The outcome of each case turns on its own facts.

15 National Westminster Bank plc v Somer International UK Limited [2002]. 16 Scottish Equitable v Derby [2001] 3 All ER 818, Harrison J at paragraphs [37]-[41].

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I note from TPO’s investigation of the Lead Case that the Newsletters issued after April 2007 were set out in a similar format and contained a similar warning.

Having reviewed the processes TP had in place before 2014, I do not consider that they fell below the standard that could reasonably be expected of a scheme administrator in similar circumstances at that time.

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The August Telephone Call

the Bank Interface is a written record from TP and confirms that he notified TP of a change of bank details on 22 August 2007.

Bank Account One was a joint account, as it was held in joint names. A notification of a change in a member’s address and/or bank details may in itself indicate a change in personal circumstances. That might include marital status.

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Applying the good faith test: the December Telephone Call

22 PO-39940 Estoppel

Limitation

17 Arjo Wiggins v Henry Thomas Ralph [2009] 079 PBLR at [26]. 18 Webber v Department for Education [2016] 102 PBLR (024).

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“The question is not whether the plaintiffs should have discovered the [overpayment] 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.” [Bold emphasis added]

“the concept of “reasonable diligence” carries with it “the notion of a desire to know, and indeed, to investigate.””20

TP’s notification procedures for UK based pensioners up until 2014

19 Paragon Finance v DB Thakerar & Co (A firm) [1999] 1 All ER 400 at 418. 20 Law Society v Sephton [2004] EWCA Civ 1627 [2005] QB 1013.

24 PO-39940 The specifics of Mr S’ case

Contract

Hardship

“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 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.”

25 PO-39940 TP’s powers under Regulation 114 of the 2010 Regulations

Maladministration

The annual Newsletters

Period of recovery of the overpayments

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Directions

Dominic Harris

Pensions Ombudsman 9 March 2026

22 The Guidelines state that hardship is not necessarily limited to financial hardship. It includes

circumstances where recovery would be detrimental to the mental welfare of the debtor or the debtor's family. 27 PO-39940 Appendix 1

Copy of TP’s letter dated 22 August 2007

Mr [S]

[Mr S’ Address]

Our Reference: [XX]

Your Reference: [XX]

TP Reference: [XX]

22 August 2007

Dear Mr [S]

I refer to your telephone call on 22 August 2007 at 09:36.

Your record has now been amended as requested. Please telephone us immediately if any of the following information is incorrect:

Country 009

Telephone No. [[XX]

Sort code [XX]

Account No. [XX]

Address [Mr S’ Address]

Please quote your Call Id Number (XX) and National Insurance Number (XX) in any correspondence regarding this amendment.

Yours sincerely

Operations Group Manager

28 PO-39940 Appendix 2

Breakdown of the overpayments

Gross Overpaid Net Tax Year Total Paid Total Due Overpayment Tax Overpayment

2007/08 £4,137.06 £2,791.13 £1,345.93 £296.12 £1,049.81

2008/09 £4,298.93 £0.00 £4,298.93 £859.60 £3,439.33

2009/10 £4,513.37 £0.00 £4,513.37 £902.60 £3,610.77

2010/11 £4,518.00 £0.00 £4,518.00 £1,807.20 £2,710.80

2011/12 £4,653.15 £0.00 £4,653.15 £1,861.20 £2,791.95

2012/13 £4,893.04 £0.00 £4,893.04 £1,957.20 £2,935.84

2013/14 £5,005.06 £0.00 £5,005.06 £2,002.00 £3,003.06

2014/15 £5,139.93 £0.00 £5,139.93 £2,055.60 £3,084.33

2015/16 £5,203.55 £0.00 £5,203.55 £2,081.20 £3,122.35

2016/17 £3,036.18 £0.00 £3,036.18 £1,214.40 £1,821.78

Total £45,398.27 £2,791.13 £42,607.14 £15,037.12 £27,570.02

29 PO-39940 Appendix 3

Account One

Date Balance

5 December 2022 £3,245

5 January 2023 £1,00023

Account Two Summary: 15 April 2022 to 13 May 2022

Previous balance £1,000

Withdrawn £9,183.5124

Paid in £9,183.51

New balance £1,000

15 April 2022

23 Mr S has provided copies of bank statements in respect of Account One covering the period 7 January 2013 to 4 January 2023. The transactions in respect of the period 5 December 2022 to 4 January 2023, includes credits from another account (Account Two) amounting to £18,663. The debits over the same period, includes a debit of £6,458 to P&O Cruise UK and a transfer of £6,505 to Account Two.

24 The sum withdrawn include a debit of £3,061 to Account One on 9 May 2022.

30 PO-39940 Appendix 4

Mr S’ household income and expenditure

Monthly household income Amount Pension £3,25025 State pension £717 Pension £500 Pension £57 Pension £45 Total £4,569

Monthly household expenditure Amount Supermarket £700 Savings (towards holidays) £1,000 Savings (towards car related expenses) £100 Savings (towards health related expenses) £100 Insurance (life/health insurance) £250 Insurance (life/health insurance) £170 Insurance (dental plan) £39 Contingency fund (unplanned emergencies) £400 Cash £300 Council Tax £304 Landline £156 Mobile phone £35 Petrol £25 Car (insurance) £50 Car (MOT/servicing) £22 Utilities (gas) £150 Utilities (electricity) £180 Utilities (water) £40 Insurance (Home) £53 Insurance (Homecare) £64 Bank fees £31 Insurance (for their son) £25 Television licence fee £13 Security £13 Lottery tickets £10 Maintenance (garden) £70 Maintenance (home) £173 Social (eating out) £100 Total monthly expenditure £4,573

Monthly income less expenditure (£4)

25 Paid into Account Two by Automated Credit.

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