UK - A determination by the pensions ombudsman has made life easier for sloppy administrators, law firm Sacker & Partners claims.
The determination followed an unsuccessful complaint brought by A.J. Noble against Biddle Pension & Life Assurance, which withheld his monthly pension payments in order to recover an overpayment.
Lawyers believe this determination gave trustees the green light to withhold payouts to pensioners to recover any overpayments made in error.
But Sacker & Partner solicitor Peter Murphy said that as these overpayments are often made by scheme administrators – which ultimately pay for any unrecovered overpayments – they will be “breathing easier” as a result of the determination.
He added that trustees must treat the determination with caution as it conflicts with section 97 of the Pensions Act, which is widely interpreted as prohibiting the suspension or reduction of a member’s pension to recoup overpayments.
Murphy said: “If the ombudsman’s view is correct, this determination will have an enormous impact upon all pension schemes and the way in which mistaken overpayments are redressed.”
He explained that trustees would no longer be forced to choose between out-of-court proceedings to seek recovery of the overpayments or “writing off” the money.
The Next Generation Pensions Committee is on a mission to promote and encourage younger voices in the industry. Kim Kaveh looks at its key objectives
This week's top stories included an analysis finding the cost of equalising guaranteed minimum pensions in schemes could hit FTSE 100 profits by up to £15bn.
Employers whose dividend to deficit recovery contribution (DRCs) ratios fall outside the "normal range" should expect to see higher regulatory scrutiny, although no fixed ratio will be set.
Investment consultants and fiduciary managers should expect a final decision on the investigation into the market to be published by the end of the year, the competition watchdog says.