Local Government Pension Scheme · CAS-58806-H1J6

CAS-58806-H1J6

Ombudsman’s Determination Applicant Miss D

Scheme Local Government Pension Scheme (the Scheme)

Respondent London Borough of Sutton (the Council)

Outcome

Complaint summary Miss D has complained that she was told on multiple occasions that the earliest date she could take retirement, without her benefits being reduced, was her 60th birthday, in March 2020. It was not until March 2020 that she was informed that the correct date was 15 September 2024.

She says that she made the decision to take early retirement from another scheme as a result of the incorrect information. She maintains she would not have taken early retirement at that time had she not been misinformed. She wants her unreduced benefits from the Scheme paid to her, backdated to March 2020.

Background information, including submissions from the parties and timeline of events

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“This letter has been prepared based on the understanding of the current legislation governing the Local Government Pension Scheme and associated overriding legislation. We make every attempt to ensure the accuracy and reliability of the information in our letters, however, this information is intended for general use and cannot cover every personal circumstance. It should not be treated as a complete and authoritative statement of the law.

In the event of any dispute over the pension benefits, the appropriate legislation will prevail as this letter does not confer any contractual or statutory rights and is provided for information purposes only.”

• The figures quoted in the 2019 Statement would be payable from age 65 and not age 60, as previously stated. These were an annual pension of £1,432.98 and a lump sum of £4,299.00.

• The estimated benefits payable to Miss D at age 60 were an annual pension of £1,138.30 and a lump sum of £3,856.33. These figures included an actuarial reduction for early payment.

2 CAS-58806-H1J6 • In 2017, she had been made redundant from her employment with Southern Housing. She had looked at her income from then to 2020, and from 2020 onwards. In relation to the period from 2017 to 2020, she had decided that her redundancy pay and savings were enough for her to survive on until 2020, knowing the level of benefits she would get from the Scheme in respect of her employments with Hackney Council and the Council. This had also informed her decision on whether to buy a new or smaller home, rent a home, make travel arrangements, pay bills and buy a car.

• If she was not paid what had been promised, she was at least £7,164.90 short in her income over those years. This would affect her plans going forward. Furthermore, in 2017, she would have made different decisions.

• She did not see why she should have to consider taking reduced benefits at age 60, as this would affect her pension amount for the rest of her life.

• She had been left financially adrift in relation to her retirement planning and in financial difficulty with regard to her financial commitments.

• The error had been caused by how Miss D’s unaggregated service had been recorded. Her service with Islington and Hackney Councils had been incorrectly recorded as qualifying service. This meant that, although not counting towards the calculation of her benefits in the Scheme, they were used when determining the reduction that would apply to her benefits if taken before her normal pension age of 65. She was incorrectly informed that she would satisfy the ‘85 Year’ rule at age 60 and her benefits would be payable without reduction from that age.

• The ‘85 Year’ rule refers to the date on which the member’s age in complete years when added to their completed calendar years of service, including years in deferment, equals 85. If this is the case the member can take their benefits early without a reduction.

• In the case of Miss D, on 14 September 2024 she will have completed 21 years of service, including a period of deferment, from when she joined the Scheme with the Council on 15 September 2003. Adding this to her age on 14 September 2024 of 64 gives a total of 85.

• A disclaimer had been included on the 2019 Statement. 3 CAS-58806-H1J6 • The provision of incorrect information did not create an entitlement to be treated as though the information was correct. So, Miss D’s benefits would be subject to actuarial reduction should she decide to receive them before September 2024.

• It apologised for the error and offered Miss D a payment of £500 in respect of any distress and inconvenience she had suffered.

• The Administrator was the expert and should have provided the correct information in the first instance or at least have checked the position in the intervening 14 years.

• She had not contacted the Administrator to discuss her benefits prior to March 2020 as she had not needed to do this.

• The Administrator should not just quote the Regulations. It should be looking to resolve the problem.

• She did not receive the benefits promised to her and has been living on a lower income than she expected for over three years. It was harder for her to pay bills and she was looking for cheaper accommodation. Her savings were approximately £5,000 lower as a result, and she was facing ongoing financial hardship. This has caused her anxiety, and she has missed opportunities to do things as she was concerned about being able to afford them.

• Having decided she could survive on her savings until 2020, she was expecting her savings to be replenished when her benefits were put into payment. This would have allowed her to use her savings for holidays, emergencies and enjoying life in retirement. By not taking her Council pension from the Scheme in 2020, her savings were not replenished. Furthermore, her living costs were not covered by the pension she was receiving as a result of her employment with Hackney Council.

• Had she known the correct position, she would not have retired after her redundancy in 2017. Instead, she would have continued working to build up her savings so she would have had more money to rely on if she decided to retire in 2020. She would have sought better paid work to support her desire to retire at 60. After her redundancy in 2017, she was offered numerous highly paid jobs as her skillset was in demand. She had turned these down. She would also have

4 CAS-58806-H1J6 been able to correctly assess where she wanted to live and the life she wanted after 2020.

• In 2018 and 2020 she went on two holidays which cost her several thousand pounds. She was happy to do this as she believed her savings would be replaced when she reached age 60. She would not have gone on these holidays had she known the true position.

• Miss D did not contact it in 2017, when she made her decision to retire following her redundancy from her employment with Southern Housing. In fact, Miss D had not contacted it to discuss her benefits until March 2020.

• Miss D had the option of taking her benefits from the Scheme on her 60th birthday with an actuarial reduction applied.

Adjudicator’s Opinion

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Miss D did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Miss D has provided further comments in response to the Opinion, which are summarised below:-

• It was reasonable for her to have relied on the information provided concerning her benefits in the Scheme, regardless of whether there was a gap between when it was provided and when she used it for her financial planning. This included the Administrator’s letter of April 2006.

• She had no reason to contact the Council to discuss her pension as she had received clear and continuous assurances that her pension would be paid from age 60 without reduction. She should have been able to rely on the professionalism of the Administrator to check the information it was sending her.

• The suggestion that, had she contacted the Council in 2017, it may have found the error, was highly speculative and effectively absolved it from any legal responsibility for the maladministration that had taken place.

• She had first discovered that her pension was not payable from age 60 without reduction in March 2020. The Adjudicator had suggested that she had a responsibility to take reasonable steps to mitigate any loss, including seeking employment opportunities. While she considered this to be a reasonable view to take, it was at odds with her circumstances at the time. The country was put on lockdown due to COVID-19 and unemployment rose significantly. With her skills being three years out of date, she does not believe she could have found appropriate employment. Furthermore, since 2017, her health had declined and,

7 CAS-58806-H1J6 since January 2018, she had been in receipt of Personal Independence Payments.

• She did not take the reduced benefits from the Scheme at age 60 because she wanted to challenge the Council’s position. Had she been aware of the time it would take for her complaint to be considered; she may have accepted her pension at age 60 to alleviate her financial position.

• Her pension from the Scheme was important to her financial planning. After her employment with Hackney Council, she was self-employed and only paid into her State pension which was not payable until 2026. After her employment with the Council, she chose not to enrol in either of the Housing Association’s or Southern Housing’s pension offerings. So, there was a substantial period of her working life not covered by pension provision.

• She disagreed with the Adjudicator’s view that, had she known in 2017 that her Scheme pension was not payable from age 60 without reduction, her plans would not have changed. She would have adjusted them to incorporate a different retirement age.

• Since March 2020, she had lost out on approximately £4,500 in pension payments. For someone living on a pension of £1,300 per month with monthly financial outgoings of £900, excluding food, the loss was substantial. This had caused stress and also a loss in savings to supplement her missing income.

• She had incurred the expense of her holiday in the belief that the lump sum she thought was due from the Scheme at age 60 would cover the cost.

• The Administrator’s offer of a £500 payment for the non-financial injustice she had suffered was minimal and disproportionate. This should be increased to at least £2,000, in line with awards granted for cases involving serious faults.

I have considered the additional points raised by Miss D and agree with the Adjudicator’s Opinion except the level of non-financial award.

Ombudsman’s decision

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Directions Within 28 days of the date of this Determination the Council shall pay Miss D £1,000 in respect of the serious distress and inconvenience which she has suffered.

Anthony Arter CBE

Deputy Pensions Ombudsman 20 February 2024

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