Ombudsman fines Cabinet Office and civil service scheme admin

The member, Dr N, had joined the Ministry of Defence and the classic section of the civil service scheme in May 1996, which was then managed by an Authorised Pension Administration Centre managed by the Cabinet Office.

In July 2004, he began paying contributions to purchase six years’ additional service in the scheme, only then to request that this contract be cancelled in August 2005 as he no longer wished to pay the additional contributions.

The APAC confirmed later that same month that it had cancelled the arrangement. 

I have considered the multiple instances of him being provided with incorrect information by MyCSP and the fact that a correction was not made until after his retirement

Anthony Arter, Pensions Ombudsman

MyCSP took over administration of the scheme in May 2012, and in 2014 Dr N asked it for an actuarially reduced retirement estimate, which it provided. It said he had purchased three years and 247 days of additional service.

In March 2017, MyCSP provided him with a benefit statement saying he had purchased four years and 204 days of additional service. 

Later that year, Dr N asked whether he could buy out the ARR reduction and surrender his lump sum for additional pension, known as inverse commutation. MyCSP eventually confirmed that this arrangement was indeed possible.

In April 2018, Dr N confirmed that he wished to buy out the ARR reduction and retire based on the information in the most recent retirement pack he had received from MyCSP, which said he had purchased four years and 346 days of additional service.

Dr N subsequently had to chase the matter, as MyCSP had not provided him with the information he needed to complete the buyout process. He sent two emails to MyCSP on May 16 2018, claiming he had been assured during a telephone call that MyCSP would respond that day.

In the event, MyCSP did not provide him with the information he had asked for until May 21.

Dr N sent a cheque on May 22 to buy out the ARR reduction. He expected his pension to be £19,791 a year, allowing for the effect of the inverse commutation option and buying out the ARR reduction.

However, he had to follow it up on May 23 as he was concerned that the cheque would not be accepted, since MyCSP had provided him with two different payee details.

Later that month, Dr N said he was looking at withdrawing his resignation and continuing to work part-time until his benefits were in payment, and was advised by his Group Captain at the MoD that a suitable position would be available until August 31.

The Cabinet Office confirmed his cheque had cleared on June 20, but on that same day MyCSP wrote to Dr N informing him it had encountered an error in relation to his contract. It subsequently sent him two revised ARR quotations based on 122 days of additional service, which both showed an annual pension of £16,407, but provided different estimates of the cost of buying out the ARR reduction. One showed a figure of £61,808, and the other showed £50,921.

As a result, Dr N requested an internal dispute resolution procedure form.

The first dispute

On June 27, MyCSP wrote to Dr N confirming which of the two buyout costs was correct, and on July 4 it emailed the Cabinet Office asking it to refund the overpaid buyout cost.

However, Dr N’s contention, submitted in his IDRP form, was that maladministration by MyCSP had resulted in a loss of expectation with long-lasting consequences for him and his family.

He said MyCSP had missed two opportunities to spot and correct its error, and it was only after his employment had ended that it informed him his pension would be reduced by £3,384.

Dr N argued that he should be paid the benefits he was quoted on April 24 2018, and that further errors by MyCSP after his application to withdraw his benefits had been made caused him significant distress and inconvenience.

Furthermore, he said that the reduction in his pension had dropped his household income below that he and his wife expected when they made their decisions to retire, which had been based on the figures provided by MyCSP.

MyCSP subsequently confirmed to him that it was not possible to withdraw his resignation, while in August 9 the Cabinet Office issued the refund and apologised for the poor service he had received.

MyCSP’s response to the first stage of the IDRP partially upheld Dr N’s complaint, finding that the APAC had not amended his records correctly to account for his decision to cease purchasing additional years’ service.

It also accepted that it had failed to respond to Dr N’s questions, that it had provided conflicting information, and that Dr N’s retirement date had passed by the time it provided him with the corrected information.

It therefore offered him £500 for distress and inconvenience.

The second dispute

The MoD then offered Dr N reinstatement of his employment from November 27 2018, and he returned to work part-time, returning to the classic section of the scheme under a partial retirement basis.

However, Dr N pursued the IDRP into its second stage, providing more detail about the extent of the disruption caused by MyCSP’s errors, and arguing it had not recognised the “serious consequences” of its errors.

He also argued that MyCSP had mishandled his return to work, being slow to respond to queries, leaving him no choice but to return to work on a part-time basis as the options given to him did not account for the fact that he had been without paid work for six months, and placing him in the wrong section of the pension scheme following his reinstatement.

The Cabinet Office missed the deadline for an IRDP stage two response, and when it did get around to responding it did not uphold his complaint on the grounds that he could not lose something to which he was never entitled.

The case eventually found its way before the Pensions Ombudsman’s adjudicator, who ruled that further action was required of the Cabinet Office as a result of the “serious level of distress and inconvenience suffered by Dr N”.

Dr N needed to show that he relied on the incorrect information to his detriment and that it was reasonable for him to do so. However, there was no record of a pivotal telephone call he claimed took place in which — he alleged — MyCSP had confirmed that there were no issues.

As such, the adjudicator ruled that it was “not reasonable” for him to have relied on the information he was given.

Furthermore, the adjudicator noted that Dr N’s decision to retire had not been irreversible. It did, however, rule that a further £1,000 should be paid in compensation.

The ombudsman’s verdict

Dr N did not accept the adjudicator’s opinion, and the case ended up before Pensions Ombudsman Anthony Arter.

The ombudsman concurred with the adjudicator in being unable to pass judgment on the matter of the telephone call, there being no record of it, and so “neither MyCSP nor the Cabinet Office can be held responsible for these losses”.

However, he continued: “I have considered the multiple instances of [Dr N] being provided with incorrect information by MyCSP and the fact a correction was not made until after his retirement.

“MyCSP has also acknowledged that it provided conflicting information in relation to the payee and amount for the cheque he needed to send it to buy out the ARR. It also provided slow responses to some of the questions raised by Dr N and there was confusion over which section of the scheme he was due to be placed in when he rejoined.

“I agree with Dr N that given the number of errors made the distress and inconvenience caused is severe, so a total distress and inconvenience payment of £2,000 is more appropriate in this case.”

The ombudsman ruled that the Cabinet Office should pay an additional £1,500 within 28 days of the ruling to increase the total compensation to £2,000.