The current Pensions Ombudsman has followed rather a hard nosed approach when deciding some recent cases. The case of Mr N (PO-9507) is one of these where employers and administrators will breathe a sigh of relief but employees will be left somewhat puzzled and potentially upset by the result.
The case concerned a member of the Scottish teachers Superannuation Scheme who opted out of being an active member after gaining 40 years’ pensionable service in the Scheme – this was not the maximum amount of pensionable service which the member could earn in the Scheme. By opting out, the member became a deferred member and so significantly reduced benefits would be payable on her death.
The Pensions Ombudsman decided that the relevant information was available to the member in the scheme booklet and the member opt out form there is no duty on an employer or a scheme administrator to tell a member that he is making a “bad” choice or even to specifically draw to the member’s attention to the consequences of making a particular decision.
This case shows the conflict between what members expect from their employers and scheme administrators and what the law actually requires them to do. It flies in the face of good member outcomes so in favour at the moment in the world of DC governance.
If you would like any advice in relation to this case please contact Penny Cogher or your usual member of the team.