Teachers Pension Scheme · CAS-38499-T5B8

CAS-38499-T5B8

Ombudsman’s Determination Applicant Mrs R

Scheme Teachers' Pension Scheme (the Scheme)

Respondent Teachers' Pensions (TP)

Outcome

Complaint summary

Background information, including submissions from the parties On 16 February 2015, Mrs R telephoned TP to ask how she would be affected by proposed changes to the Scheme. She wanted to know which “bracket” of member she fell into. TP confirmed that Mrs R would have “full protection” because she was within 10 years of retirement.

During a subsequent conversation, TP confirmed Mrs R’s NPA under the Scheme was age 60. In February 2016, having reached age 60, Mrs R decided to continue working past her NPA without claiming her pension.

In December 2018, Mrs R obtained advice from a financial adviser (FA), who informed her that she was eligible to claim her pension from age 60, and she needed to do this without delay to avoid a reduction in her pension. The FA also informed Mrs R that she could not claim backdated pension payments from her NPA as the Scheme rules did not allow that.

1 CAS-38499-T5B8 On 8 April 2019, Mrs R raised a complaint with TP under the Scheme’s two-stage Internal Dispute Resolution Procedure (IDRP). In summary she said:-

• She was shocked to learn that she could have claimed her pension at age 60 and now she “may have forfeited the £12,000 [she] would have received during that period.”

• She was not aware of any communication from TP advising that she could claim her pension from age 60. By deferring taking her pension past 60, she believed “the accrued benefit of monies not taken, to be rolled up to increase the size of an annuity when it is eventually taken.” She understood this to be the case with personal pension schemes and the State Pension.

• Her situation was aggravated by the fact that her employment circumstances had changed, so now she only worked 10 hours per year as a self-employed music teacher.

• Her intention was to work until her state pension age of 66 and not claim her pension until then.

• She had been through a divorce, the attempted suicide of one of her children and her father’s terminal illness, so examining her pension was not at the forefront of her mind.

• It was only when she finally sought advice from her FA, in December 2018, that she found out she needed to claim her pension to avoid further reduction.

• TP failed to inform her of her pension options at age 60. She checked all the correspondence received from TP and could not find anything regarding her pension options at age 60.

On 24 April 2019, TP responded to Mrs R under stage one of the IDRP and in summary it said:-

• When Mrs R was first employed in 1982, her employer would have provided her with a copy of the Scheme Booklet ‘Your Pension: A Guide to the Teachers’ Superannuation England and Wales’ (the Booklet). The Booklet was produced by the Department for Education (DfE) and was freely available, like all other Scheme literature, to all participating employers who were responsible for providing a copy to new employees.

• The Booklet explained that the NPA for all members was age 60 and that on leaving the Scheme, a member’s pension was deferred until payment at age 60.

• The employer should have advised Mrs R of her options, either by guiding her to TP’s website, or providing her with appropriate literature.

• Capita Tracing Services was introduced in 2014 whereby TP emailed deferred members to verify their details and to notify them of their pension entitlement. It 2 CAS-38499-T5B8 noted such an email was sent to Mrs R on 1 May 2018. This email was sent in bulk and was not connected to the central administration of TP.

• In the telephone call between Mrs R and TP on 16 February 2015, Mrs R enquired what her NPA was. TP was satisfied it was confirmed to Mrs R that her NPA was 60.

• Mrs R had been sent annual statements which would have notified her that her NPA was age 60. It provided a copy of the annual statement from March 2017 to confirm this was the case.

• Mrs R was now able to claim her pension which would be payable from 1 September 2018. Any arrears would be paid to her as a one-off payment and will be liable for tax.

In June 2019, in response to TP’s IDRP stage one response, Mrs R emailed it saying she had never received the email dated 1 May 2018. She also asked for a telephone call note from February 2015.

On 10 July 2019, TP told Mrs R that, as the email dated 1 May 2018 was part of bulk emails sent by Capita Tracing Services, it was not involved in sending it and did not have a copy of it. TP also said it had listened to the call in question and confirmed again that during the call Mrs R was informed that her NPA was age 60.

On 18 July 2019, Mrs R appealed TP’s IDRP stage one response under stage two of the IDRP. She denied receiving the email of 1 May 2018 and maintained TP did not alert her around her NPA, of the implications of not taking her pension at age 60.

On 1 August 2019, the DfE sent Mrs R a response under stage two of the IDRP not upholding her appeal and, in summary, said:-

• TP’s website provided members with several retirement options, which included the option of deferring ceasing employment and accruing further service in the Scheme.

• However, TP’s website was intended to provide general guidance and advice to the typical member following the conventional career path; where a member has a more unusual or complex query, they can address this with TP.

• It was ultimately the member’s responsibility to be aware of their own individual circumstances, and to make, and understand the impact of, decisions based on their own situation.

• It was satisfied that TP had verified that Capita Tracing Services sent an email on 1 May 2018 confirming Mrs R’s NPA. It was also satisfied that, during the telephone conversation in February 2015, Mrs R was informed of her NPA. It also offered to provide Mrs R with a telephone recording should she wish to listen to the call.

3 CAS-38499-T5B8 In July 2019, Mrs R raised further issues with TP regarding the email sent by Capita Tracing Services. In response, TP sent Mrs R a letter dated 12 August 2019 in which it provided further detailed points:-

• It had conducted a review of the tracing process to check the sequence of events.

• In 2015, an exercise commenced to contact members whose record indicated that they may have been eligible to claim their pension because they had reached NPA.

• Members who continued to work past their NPA were not contacted, because it was at the discretion of the scheme member as to whether they took this course of action. The exercise ended in 2019.

• Mrs R was included in the bulk emails of 1 May 2018 because, at that time, the aim was to identify eligible members. In her case, the service and salary details had been provided to TP up to 31 December 2016, although there was no indication that she had left her employment on that date.

• As the tracing service could not establish whether Mrs R was in pensionable employment, she was included in the tracing exercise.

• On 17 December 2018, further service and salary details were reported to TP by Mrs R’s employer. These confirmed she was in continuous employment on an irregular basis until she left her post in August 2018. Had that information been uploaded contemporaneously, she would not have been included in the tracing service bulk emails.

• Where the tracing service identified an address match, it did not contact the member to verify their address. A file was then sent to TP so TP could write to the member. Unfortunately, there was no evidence that the letter was issued for which it apologised.

• This did not change the fact that information was available to Mrs R regarding her retirement option either on the TP website or through the TP Contact Centre.

• The reason Mrs R was included in the tracing exercise was because of the delay in her service record being updated.

• It provided Mrs R with a copy of the telephone transcript from 16 February 2015, which confirmed that TP had informed her of her NPA.

Summary of TP’s position:

• TP’s employees are not registered FAs and therefore are unable to advise members of the actions they should take in connection with their membership in the Scheme. It provided a copy of the extract from its website confirming this, which can be found in Appendix 2.

4 CAS-38499-T5B8 • Relevant information can be found on TP’s website which is generic and does not answer all possible questions. Therefore, it is open to members to ask TP for more information regarding retirement planning.

• TP’s website provides a specific retirement planning guide (the Guide) to assist members and various factsheets to help members understand their pension and how they can make the most of it. It also includes details regarding average salary.

• It referred to Chapter 2 Part 7 of the 2010 Final Salary Regulations (the Regulations), under which Mrs R falls as a “pre 2007 entrant” otherwise known as an NPA 60 member. Schedule 7 of the Regulations explains why Mrs R’s pension was payable from 1 September 2018 and not from her NPA of 60. Relevant extracts of the Regulations can be found in Appendix 1.

• It referred to page 10 of the Guide available on TP’s website, relevant extracts of which are set out in Appendix 2.

• The Regulations provide that Mrs R needed to satisfy the condition for retirement, upon reaching NPA. Her retirement date is the day after she ceases to be in pensionable employment. Therefore, Mrs R is not eligible to be paid a pension backdated to her NPA.

• It was satisfied that there was sufficient information available to Mrs R to have realised her pension could not be backdated to her NPA as she had not ceased employment.

Summary of Mrs R’s position:

• The fact that TP’s employees are not registered FAs is a “red herring”. The employee simply confirmed her NPA was 60. This is not the same as “spelling out the detriment of not drawing her pension at that date.”

• TP is saying that it is a duty of a non-expert member to understand and take their own action and “scour the website for information and to hire an [FA] at the right moment.”

• The information TP referred to was complex and very unhelpful to anybody proceeding without expert advice.

• The information provided by TP does not inform a member of the implications of delaying claiming the pension beyond NPA.

• Expecting members to rely on their retention of Scheme booklets when joining the Scheme, in her case since 1982, does not seem to show much duty of care. “Most teachers are not devoting much time to planning their retirement when they are just embarking on their careers in their twenties.”

5 CAS-38499-T5B8 • Regardless of the outcome of her complaint, she hopes that TP would pro-actively alert its members before their NPA, of the need to take action like all normal private pension providers do.

Adjudicator’s Opinion

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Mrs R did not accept the Adjudicator’s Opinion, and in response she reiterated her main points and added:-

• She believes all the onus is put on the member to keep themselves fully informed.

• TP has failed in its duty of care to proactively support its member and fell below the standards expected of private pension providers such as Aviva. She provided a copy of Aviva’s letter alerting her to her pension options four months prior to her retirement age.

• TP has retained approximately £11,000 of pension money she would have received had it alerted her to her pension options, so it has profited at her expense.

• She “naively assumed that any benefits not taken would be rolled up with interest.”

• She would like TP to consider making an ex-gratia offer to compensate her for the loss of the money she has not received since her NPA.

7 CAS-38499-T5B8 Mrs R’s complaint was passed to me to consider. I agree with the Adjudicator’s Opinion and note the additional points made by Mrs R.

Ombudsman’s decision Mrs R is unhappy that TP did not inform her that her pension would not be backdated to her NPA, if she did not claim it at that time but continued working. She considers that she has incurred a financial loss as a result of TP not informing her of this.

TP is bound to administer the Scheme in accordance with the Scheme’s governing regulations. The Regulations state that Mrs R, as a pre-2007 entrant of the Scheme, with an NPA of 60, was eligible to claim her pension the day after she ceased employment. Mrs R did not cease employment until the end of August 2018, so she is not eligible to have her pension backdated to age 60. I find that TP correctly interpreted and applied the Regulations in Mrs R’s case. TP has no discretionary power to make an ex-gratia payment to Mrs R to compensate her for the pension she did not claim from her NPA.

Mrs R telephoned TP in February 2015 to enquire how her pension would be affected by the proposed changes to the Scheme. She also enquired what her NPA was. TP confirmed that her NPA was 60 and she had full protection until age 60. But Mrs R did not enquire about the implications of her deferring claiming her pension and working past her NPA. Had Mrs R queried this with TP, she could have mitigated her loss.

TP has a duty of care to provide general information to its members but is not expected to provide specific information unless a member has made specific enquiries. Mrs R admitted that she simply assumed that her pension would increase in value and be rolled up if she decided not to claim it at her NPA. It is important that members check all the information available, read it carefully and if unsure, make specific enquiries with the scheme before making important decisions regarding retirement.

I appreciate that TP had not sent Mrs R details of her pension options as she was approaching her NPA and that she believes it should have done so, like Aviva did. However, I find there was sufficient information on TP’s website that would have made Mrs R aware of the implications of not claiming her pension and continuing to work past her NPA. Mrs R could have also asked her employer for further information.

I do not uphold Mrs R’s complaint.

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Anthony Arter

Pensions Ombudsman 9 August 2021

9 CAS-38499-T5B8 Appendix 1 The Teachers’ Pensions Regulations 2010

Part 7 Benefit for Teachers

Chapter 2

Interpretation of provisions relating to normal pension age

“49 “Pre-2007 entrant”: meaning and normal pension age

(1) A person (P) is a pre-2007 entrant if-

(a) P was in pensionable employment at any time before 1st January 2007, is a UK transferee with NPA 60 rights or is a public sector TUPE transferee with NPA 60 rights, and

(b) P is not a person with mixed service or a 2007 or later entrant.

(2) A pre-2007 entrant has a normal pension age of 60 in relation to all of the person’s reckonable service.”

Schedule 7

Retirement Benefits

Regulation 60(2)(b)

1 Case A: retirement on or after reaching normal pension age

…

“2 (1) Where a person (P) satisfies the condition for retirement, the entitlement day for Case A is-

If P is in pensionable employment on the day on which P reaches the normal pension age in relation to the reckonable service, the day after P ceases to be in pensionable employment.”

10 CAS-38499-T5B8 Appendix 2 Extract from the Guide on TP website says:

“Where can I get help?

When making financial decisions that affect your future it’s always best to seek independent financial advice…

“Age retirement benefits are payable when you reach Normal Pension Age (NPA) or from the day after you leave pensionable service. If you continue working and remain an active member of the Scheme through to and after reaching your NPA your pension will be payable from the day after you left pensionable service, which may be earlier than the date of leaving pensionable employment.”

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