Nhs Pension Scheme · CAS-32568-N6H8

CAS-32568-N6H8

Ombudsman’s Determination Applicant Mrs D

Scheme NHS Pension Scheme (the Scheme)

Respondent NHS Pensions

Outcome

Complaint summary

Background information, including submissions from the parties

• If Mrs D remained a member of the 1995 Section of the Scheme and took her retirement benefits when she reached her normal pension age (NPA), age 60, she might receive:

o an annual pension of £4,618.00 and a lump sum of £14,454.00, if she opted for the standard benefits; or

o a reduced annual pension of £3,872.00 and a lump sum of £25,811.00, if she opted for the maximum lump sum.

• If Mrs D moved to the 2008 Section of the Scheme, and took her retirement benefits when she reached age 60, five years before this Section’s NPA, her benefits would be reduced and she might receive: CAS-32568-N6H8 o an annual pension of £4,243.00 and a lump sum of £7,164.00, if she opted for the standard benefits; or

o a reduced annual pension of £3,112.00 and a lump sum of £20,746.00 if she opted for the maximum lump sum.

The 2010 statement explained that the figures were based on the most up-to-date information that NHS Pensions held. They were for illustrative purposes only and were not guaranteed.

NHS Pensions asked Mrs D to complete the relevant form if she wished to transfer to the 2008 Section of the Scheme.

• an annual pension of £5,584.66 and a lump sum of £16,753.97, if she opted for the standard benefits; or

• a reduced annual pension of £4,487.67 and a lump sum of £29,917.82 if she opted for the maximum lump sum.

In December 2016, Mrs D reached NPA. Mrs D has said that she continued to work to “boost” the lump sum available to her when she retired.

On 19 June 2018, Mrs D’s employer (the Employer) approved her request to take flexible retirement from 19 November 2018.

On 15 August 2018, NHS Pensions received Mrs D’s retirement application form requesting the “standard benefits option.”

On 25 September 2018, Mrs D contacted NHS Pensions for an estimate of her pension benefits. NHS Pensions has said that Mrs D was employed in two part-time posts, so it used the hours worked and pay information supplied by the Employer to calculate her pensionable pay figure.

On 24 October 2018, NHS Pensions issued Mrs D with a benefit statement (the 2018 statement), as “an estimated quotation only.” It showed that, based on a pensionable pay figure of £49,028.47 on retirement from 18 November 2018, she might receive:

• an annual pension of £11,267.90 and a lump sum of £33,803.70, if she opted for the standard benefits; or

• a reduced annual pension of £9,054.56 and a lump sum of £60,363.75 if she opted for the maximum lump sum.

2 CAS-32568-N6H8 Mrs D has said that she telephoned NHS Pensions on 29 October 2018, to query the figures in the 2018 statement and was informed that she would “definitely receive £60,363.75 as a lump sum and £754.00 per month pension.” NHS Pensions has said that the call recording is no longer available, but the call notes say:

“Member has received benefit statement (scanned 24/10/2018). Adv member on their AW8 they have opted to receive standard benefits rather than commute pension for larger lump sum. Adv member to write in if they wish to commute for largest tax free lump sum and reduced pension.”

On 5 November 2018, Mrs D wrote to NHS Pensions and requested the maximum lump sum option.

On 27 November 2018, NHS Pensions began processing Mrs D’s retirement application. During this process, it became aware that some of the information provided by the Employer regarding Mrs D’s pensionable pay and hours was incorrect. NHS Pensions noticed that Mrs D had overpaid her pension contributions and arranged for her to receive a refund.

In early January 2019, NHS Pensions contacted the Employer again because it considered that the information it had received was incorrect.

Once NHS Pensions was satisfied that it had received the correct information, it calculated Mrs D’s retirement benefits to be:

• annual pension of £5,227.91; and

• a maximum lump sum of £34,852.72.

On 23 January 2019, NHS Pensions paid Mrs D a lump sum of £34,852.72. In response, Mrs D telephoned NHS Pensions to query the amount because it was lower than she had expected. Mrs D also contacted the Employer and it informed her that:-

• The 2018 statement was incorrect because she had “never had a pensionable pay [of approximately £49,000.00].”

• NHS Pensions “should have spotted” that the pensionable pay was incorrect but had never contacted the Employer to query it.

• She should contact NHS Pensions if she wanted to escalate the issue further.

On 2 February 2019, Mrs D raised a complaint under the Scheme’s Internal Dispute Resolution Procedure (IDRP). In summary, she said:-

• She had contacted NHS Pensions after she received the 2018 statement and it had “confirmed that the figures were correct.”

• She had contacted NHS Pensions after she received the lump sum because it was around £25,000.00 less than she had expected. During this telephone 3 CAS-32568-N6H8 conversation, NHS Pensions informed her that the 2018 statement had been calculated incorrectly.

• This “catastrophic and inexcusable mistake” had impacted on her future plans.

• NHS Pensions should honour the 2018 statement, pay her interest on the lump sum from 21 November 2018 to 23 January 2019.

• NHS should pay her compensation.

On 29 March 2019, NHS Pensions issued its response under stage one of the IDRP and said:-

• Mrs D was an active member of the Scheme from 1 September 1998 until she retired in November 2018. During her employment, she worked in part-time positions.

• It relied on employers to provide the correct pensionable pay and information on the hours worked so that it could calculate benefits accurately.

• As a member of the 1995 Section of the Scheme, Mrs D’s benefits were calculated using “the accrued membership for benefit purposes and [her] highest pensionable pay figure of [her] last three years of active membership.”

• Mrs D held “concurrent [and part-time] positions” so the “composite” pensionable pay figure took all of her employment into account, as with a full-time worker.

• NHS Pensions received Mrs D’s retirement application form in August 2018, which said she would retire on 18 November 2018. It aimed to pay all lump sums the day after a member retired, but in Mrs D’s case payment was not made until January 2019, so it upheld this part of her complaint.

• Under the Regulations that govern the Scheme, pension on retirement must be paid monthly. Otherwise, the Scheme must pay interest on those benefits. It had not paid Mrs D’s pension because the Employer had to reconfirm the data that it had provided to NHS Pensions which caused a delay.

• NHS Pensions would calculate the interest that Mrs D was due and pay the amount to her bank account directly.

• The Employer had provided incorrect pay details and working hours, so the 2018 statement was incorrect.

• NHS Pensions had paid Mrs D the correct amount and could not offer compensation or honour the overstated figures.

Mrs D remained dissatisfied and asked NHS Pensions to review her complaint under stage two of the IDRP.

4 CAS-32568-N6H8 On 20 May 2019, NHS Pensions provided its response under stage two of the IDRP. It repeated the points made in paragraph 20 above and also said:-

• It could not pay Mrs D a level of benefit she was not entitled to receive.

• The 2010 and 2016 statements were consistent and accurate estimates.

• The 2018 statement quoted a “much higher pay” figure, with correspondingly higher pension and lump sum amounts, so it would have been reasonable for Mrs D to question the disproportionate increase.

• Mrs D had applied for retirement before she requested the 2018 statement. Consequently, it was unlikely that the error had a major impact on her future plans.

• Mrs D opted to take the maximum lump sum based on the 2018 statement. If she wished to take the standard benefits, this could be arranged but she would have to repay part of the lump sum.

• It partly upheld Mrs D’s complaint because it had issued an incorrect estimate, but it could not honour the incorrect benefits quoted in the 2018 statement.

Mrs D remained dissatisfied. She maintained that:-

• During the telephone conversation on 29 October 2018, NHS Pensions had indicated that she would “definitely receive £60,363.75 as a lump sum and £754.00 per month pension.”

• She had to purchase a smaller house to reduce the monthly running costs.

• NHS Pensions did not contact her between October 2018 and January 2019 to inform her that there had been a mistake.

Adjudicator’s Opinion

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Mrs D did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider.

Mrs D provided her further comments which do not change the outcome. Mrs D has said:-

• NHS Pensions informed her that she would receive a lump sum of £60,000.00 and she believed that the figure was correct because she had been working additional bank shifts.

• NHS Pensions should have informed her of the error when it became aware of it.

• She should receive “compensation for this inexcusable error.”

I agree with the Adjudicator’s Opinion and note the additional points raised by Mrs D.

Ombudsman’s decision

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I do not uphold Mrs D’s complaint.

Anthony Arter

Pensions Ombudsman 25 January 2021

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