TPO orders Teachers’ Pensions to refund nearly £30k in excess employer contributions

The Pensions Ombudsman (TPO) has ordered Teachers’ Pensions to refund around £28,800, plus late payment interest, in excess employer pension contributions to Tower House School Torbay Ltd (THST).

The Ombudsman upheld a complaint from THST sole shareholder and director, Mr D, that stated Teachers’ Pensions had refused to return a refund of employer contributions.

Teachers’ Pensions had returned the employee contributions to a former Tower House School teacher, Miss R, having disallowed part of her pensionable service.

It had believed that Mr D had sold the school at around the same time Miss R retired and the employer contribution refund was due to the new owners of the school, as a refund of employer contributions cannot be made to an individual and therefore had to go to the school.

Element Schools Ltd was believed by Teachers’ Pensions to be the owner of the school after THST ceased trading in May 2017, but the ombudsman concluded it did not sell the school to Element Schools, and it was a straightforward arm’s length lease agreement.

From 2012, Tower House School was operated by THST Ltd. Mr D holds the physical building from which Tower House School operated in a separate pension fund.

Teachers’ Pensions argued that, as Element Schools went into administration in December 2017 owing more than £34,000 to the Teachers’ Pension Scheme, the £28,803.62 that Teachers’ Pensions would otherwise have returned to the school was to be used to offset this debt.

However, the pensions ombudsman, Dominic Harris, stated that the school as a business had no legal personality and could not have been responsible for making or receiving refunded contributions.

Therefore, the continuation of the school as a business was ruled to not be relevant to the issue of the contributions.

“The refunded contributions are, as set out above, due to Miss R’s employer,” Harris said.

“It would appear to me that the unpaid contributions in respect of other staff members after June 2017 are due from an entirely different person or entity, the proprietor, or Element Schools.

"Based on the evidence and the balance of probabilities, I do not consider that I can
safely direct that the contributions are paid direct to Mr D personally if he was not
responsible for paying the employer contributions after 2012.

"But, with THST Ltd now added as an applicant, and given that THST Ltd was incorporated on 19 March 2012, while the refunded pension contributions related to Miss R’s service from August 2012, I am confident that I am directing that the contributions are being returned to the party that had responsibility for paying them.

"So to summarise, I find the refund of employer contributions in respect of Miss R are payable to THST Ltd. The contributions are not payable to Element Schools, and Teachers’ Pensions are not able to offset this sum against unpaid contributions owed by Element Schools in respect of different members."

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