TPO partially upholds complaint against Teachers' Pensions

The Pensions Ombudsman (TPO) has partially upheld a complaint against Teachers’ Pensions for failing to take appropriate action to adequately investigate after a member claimed that their pension was incorrectly calculated.

Teachers’ Pensions has been ordered to pay the complainant, Mrs G, £3,000 within 28 days in recognition of the “exceptional” distress and inconvenience caused, although it will not be required to meet legal costs.

Mrs G was a member of the NHS Pension Scheme, having elected to remain in this scheme when given the option to move to the Teachers’ Pension Scheme or the Local Government Pension Scheme in 1971.

Teachers’ Pensions’ predecessors maintained a record of her service, however, which was recorded as 02 service, meaning it was deemed non-pensionable.

On 31 March 2001, Mrs G began employed on a part-time basis, meaning that she was no long eligible for membership of the NHS Pension Scheme, until 1 October 2006, when she specifically elected to accrue pension service in the scheme,

Around this time, she also began receiving benefits from the NHS Pension Scheme in relation to her service between 1971 and 2001.

In February 2013, however, Mrs G’s records were affected by an update to Teachers’ Pension computer system, which switched her period of non-pensionable service between 1971 and 2001 to showing as pensionable on Teachers’ Pensions’ records.

Teachers’ Pensions subsequently confirmed to Mrs G in June 2013 that she had 34 years 143 days pensionable service.

Mrs G contacted Teachers’ Pensions on receipt of this information, to flag that she thought the pension was being overstated and to confirm that she was already in receipt of a pension from the NHS Pension Scheme, but Teachers’ Pensions said that it could see no error in her service record.

Mrs G reiterated her concerns later in June 2013, with Teachers’ Pensions then confirming that it would contact her employer’s HR department, Lancashire County Council (LCC), to clarify the situation.

On 1 September 2013, Mrs G retired and her pension was put into payment.

Teachers’ Pensions continued to query the matter with LCC in June 2015 and December 2016, as well as February 2017, with LCC responding at this time to confirm that records indicated Teachers’ Pension contributions started on 1 October 2006, but that it could not confirm any NHS pension contributions.

Teachers’ Pensions shared this update with Mrs G, suggesting that she contact NHS Business Services Authority, which administers the NHS Pension Scheme, to request the information regarding her employment herself.

However, on 13 February 2017, Mrs G responded stating that she had understood the issue to be resolved, and did not accept that she could be responsible or penalised for Teachers’ Pension’s mistake.

Teachers’ Pension then confirmed in March 2017 that Mrs G's correct pensionable service was 4 years and 152 days, with her lump sum reduced from £56,091.29 to £7,284.38 and her annual pension from £18,697.10 to £2,428.13, amounting to an overpayment of £96,320.20.

Mrs G subsequently questioned the accuracy of this calculation and the legality of the reduction to her pension, submitting a complain to the internal dispute resolution procedure (IDRP) in May 2017.

However, this process concluded that Mrs G had been aware that the pension benefits were incorrect, arguing that once Teachers’ Pensions identified the matter remained outstanding corrective action was taken.

Whilst Mrs G wrote to the Department for Education in July 2017 to raise a complaint under stage two of the IDRP Teachers’ Pensions again argued that, based on the last conversation on the issue in 2013, Mrs G would not have believed that the issue was resolved or that she was entitled to the money she received.

In the decision, TPO accepted that Mrs G acted honestly and appropriately when contacting Teachers’ Pensions, and did everything she could reasonably be expected to do at the time of receiving the incorrect details.

Based on relevant telephone records, however, the ombudsman concluded that Mrs G should not have relied on Teachers’ Pensions’ subsequent lack of contact as an indication that the pension being paid was correct, stating that the responses received to her enquires were not sufficient for her to believe she was entitled to the money, particularly in light of the large discrepancy.

"I understand the argument that had Mrs G know this was an underpayment and in the knowledge that it may have to be repaid, she would not have spent it," ombudsman, Anthony Arter, stated.

"However, Mrs G chose to spend the money without any explanation as to why she was entitled to money that she had no previous expectation of an in the knowledge that it was being investigated without any apparent resolution to that investigation."

Whilst the ombudsman also considered a number of further defences, he concluded that “in the absence of an applicable defence from recovery, Teachers’ Pensions is entitled to seek recovery of the overpayment”.

However, Arter agreed that the events amounted to maladministration and will have caused “exceptional” levels of distress and inconvenience, noting that this was “severely compounded” by Teachers’ pensions repeated failure to take appropriate steps.

“It is unfathomable how this was somehow left for so long with little attention seemingly being paid to the significance of the information provided by Mrs G," the decision stated.

In light of this, he confirmed that Teachers’ Pension has been ordered to pay £3,000 in respect of non-financial injustice, although it will not have to pay for the legal costs incurred.

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