UK - The pensions ombudsman has ordered an administration firm to reimburse early retirement benefits after it failed to pass funding advice on to scheme trustees.
The complaint was brought by Mr Wright, a member of the Bagshaws of Melton Limited Pension Fund. He claimed a decision by the firm’s owner, Mr Bagshaw, to take early retirement had depleted the fund’s assets, placing his own benefits in jeopardy.
Although the complaint was brought against the Bagshaws of Melton and its owner, the ombudsman determined the fund’s administrator was at fault. It was found the firm had committed maladministration by arranging payment of the owner’s early retirement pension without company consent.
The administrators, Bland Bankart Financial Services, had been given a letter by the scheme’s insurer which explained that if Mr Bagshaw retired early, the funding position of the scheme should be reassessed.
But Bland Bankart apparently failed to pass on this information – with no documentation to suggest otherwise.
The ombudsman David Laverick directed that the administrator should pay the additional cost, which had been caused by the unlawful augmentation of the early retirement pension.
However, Laverick added that he was satisfied that Mr Bagshaw either did know, or ought to have known, that his decision to retire early would come at some cost to the scheme, and that he should have applied an actuarial reduction to his pension to reflect that early payment.
He told the trustees to assign “any rights which the scheme may have to recover” from the member to the administrator – giving Bland Bankart the opportunity to pursue Bagshaw himself for the overpayment.
Pinsent Curtis Biddle solicitor Simon Tyler said: “The complicated facts justify the ombudsman’s unusual decision to order the assignment of the right to recover the overpayment.
“This order ensured that the fund would receive the additional assets which had been wrongfully paid out of the fund by the administrators, while providing those administrators with a remedy against Mr Bagshaw whom the ombudsman criticised on various grounds in his determination.”
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