The Pensions Ombudsman has partially upheld two more complaints about overpayments to members of the Teachers’ Pension Scheme, the latest in a series of cases where the scheme and its administrators, Teachers’ Pensions, have faced accusations of maladministration.
Pensions Expert reported in November that Edi Truell, co-founder of the Pension Superfund, and Professor Stephen Heppell, former adviser to the Department for Education, were proceeding with their own complaints against the Teachers’ Pension Scheme.
Heppell had been asked to repay £98,000 and had his pension reduced by £1,000 a month, while Truell’s mother was denied a pension — he estimated it should be worth around £5,000 a year — on the grounds that she could not reproduce payslips dating back to the 1950s.
In the two most recent cases, Leicester County Council was fined £1,000 for providing incorrect salary information to the scheme, which led to Mrs R being overpaid, while Teachers’ Pensions was told to pay £3,000 to Mrs G after causing her “exceptional distress and inconvenience”.
It is unfathomable how this was somehow left unresolved for so long, with little attention seemingly being paid to the significance of the information provided by Mrs G
Anthony Arter, Pensions Ombudsman
Teachers’ Pensions’ ‘repeated failures’
The case of Mrs G arose after Teachers’ Pensions demanded that she repay more than £96,000 she had been mistakenly awarded.
Her time working in education with children with special educational needs saw her accrue pension in the NHS Pension Scheme, of which she elected to remain a member even after responsibility for this area of education was passed from health to the education sector.
Though she remained a member of the NHS scheme, the precursor to Teachers’ Pensions maintained a record of her service, which — as with other employees who had elected to remain with the NHS scheme — was deemed non-pensionable.
However, when Teachers’ Pensions updated its computer systems in February 2013, her period of non-pensionable service between 1971 and 2001 was showing as pensionable service, resulting in a benefit statement issued before her retirement that showed she had accrued 34 years and 143 days pensionable service, resulting in an annual pension of £18,697 and a lump sum worth £56,091.
Mrs G repeatedly contacted Teachers’ Pensions to explain that she thought the quoted amount had been overstated, as she was already in receipt of a pension from the NHS Pension Scheme for her work between 1971 and 2001.
She asked Teachers’ Pensions to check the accuracy of its statement, and it told her it could see no error. She contacted it again on the same matter and was told that the administrator would contact her employer, Lancashire County Council, to clarify matters.
Mrs G retired in 2013 and her pension was put into payment, but it was not until February 8 2017 that Lancashire County Council responded to Teachers’ Pensions’ investigation to say that it could not confirm any NHS Pensions contributions, since the scheme administrator would not confirm details without Mrs G’s consent.
That same day, Teachers’ Pensions wrote to Mrs G informing her that the issue had not been resolved after all. On March 16 it sent her an updated benefits statement, showing her pensionable service had gone from 34 years to four years, her annual pension had been reduced from £18,697 to £2,428.13, and the lump sum value from £56,091 to £7,284.38.
She was then asked to repay £96,320.
Her complaints to Teachers’ Pensions and the Department for Education eventually found their way to the Pensions Ombudsman.
No certainty on resolution
In summary, Mrs G’s argument was that she had been overpaid due to a mistake made by Teachers’ Pensions. She had taken all reasonable steps to query the figures and had been satisfied that the figures quoted were correct.
She subsequently spent significant sums of money that she would not otherwise have spent were she aware that the issue had not been resolved. Mrs G said she had acted honestly and in good faith, and Teachers’ Pensions had said nothing to indicate that it was not confident in the figures it provided.
Reviewing the case, the ombudsman reiterated that there are circumstances where the scheme would not have been obliged to seek repayment, such as where “change of position” is demonstrated.
Change of position occurs where the applicant can show that they detrimentally changed their position as a result of the overpayment, such as making irreversible expenditure on things they would not otherwise have spent money on.
Mrs G spent money on holidays, a cruise, a new kitchen, and a gift to her son that, she argued, she would not have made were she aware that her pension was still in doubt.
The ombudsman, however, found that Mrs G should not have relied on Teachers’ Pensions’ lack of contact with her when determining that the matter had been settled.
“Ultimately, the necessary investigation to determine the correct position was instigated, but at no point during the discussions do I consider that Mrs G was persuaded that the figures provided were correct,” Pensions Obudsman Anthony Arter wrote.
“While Mrs G does not have a defence from recovery, the events complained about amount to maladministration and will no doubt have caused Mrs G an exceptional level of distress and inconvenience,” he added.
“This is severely compounded by the fact that Teachers’ Pensions was given a very clear understanding that the situation was wrong and repeatedly failed to take appropriate steps.
“It is unfathomable how this was somehow left unresolved for so long with little attention seemingly being paid to the significance of the information provided by Mrs G.”
The ombudsman ruled that Teachers’ Pensions had “repeatedly failed to take the necessary steps to investigate the information Mrs G had provided”, and thereby ordered it to pay her £3,000, or else to deduct that amount — with her agreement — from the £96,320 overpayment it is nonetheless allowed to pursue.
Leicester County Council fined
In the second case, the ombudsman ordered Leicester County Council to pay Mrs R £1,000 for “serious non-financial injustice” she suffered because of its failure to provide Teachers’ Pensions with correct salary data, leading to an overpayment.
The average salary rate from the data first used by Teachers’ Pensions was £53,642, but this fell to £44,454 after it queried the figures with Leicester County Council, leading the council to provide updated figures.
Teachers’ Pension Scheme faces high-profile ombudsman complaints
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As a result, Mrs R was overpaid by £8,042.
Leicester County Council repeatedly denied that it was the source of the incorrect salary information, suggesting that Teachers’ Pensions’ administration systems might have produced the error. The ombudsman found no information to support this claim, however.
Though Mrs R did not suffer financial loss, because she was never entitled to the amount she had to repay, he found that she had suffered “sustained non-financial injustice in the form of serious distress and inconvenience”.
