TPO upholds complaint against employer for pensionable pay miscalculation

The Pensions Ombudsman (TPO) has upheld a complaint against Johnson & Johnson Consumer UK Limited after finding that the complainant’s pensionable pay was partly miscalculated.

The respondent was ordered to amend the complainant, Mr Y's, final pensionable pay to £114,190.33 as well as pay Mr Y £1,000 in recognition of the distress and inconvenience caused to him by its maladministration.

Mr Y raised concerns that his final pensionable pay has been incorrectly calculated as the values of his bonus figures have been understated.

The complainant also said that Johnson & Johnson has not been able to provide evidence to show it was taking a consistent approach to his bonus calculations.

Given this, he complained that this lack of consistency means he can not be sure of the accuracy of the pensionable pay that will be used to calculate his benefits.

Mr Y initially complained to TPO regarding the understatement of his pensionable pay, which is made up of his base salary and any bonuses.

However, this complaint about his base salary was found to fall outside of TPO’s jurisdiction, although the complaint in relation to the conversion of his bonus was able to be investigated by TPO.

Between July and September 2017, TPO and Johnson & Johnson conversed about the information available regarding the conversion of Mr Y’s bonus.

Hogan Lovells, representing Johnson & Johnson, set out that due to Mr Y being an overseas member the calculation of the pensionable salary was based on a notional UK salary.

From December 2017 to January 2018, Johnson & Johnson and Mr Y exchanged emails in which the employer mentioned that the Global Compensation Framework was implemented while Mr Y was abroad and shared calculations for the three previous years of pensionable pay.

Mr Y complained however, that despite what Johnson & Johnson explained, the direct conversion of the bonus amount from the local currency to GBP at the date of payment, this did not apply to the bonus amounts between 2008 and 2012.

Therefore, he stated that these were “inaccurate and understated” but Johnson & Johnson did not uphold the complaint, as it claimed correct figures had been used.

Following the complaint being referred to TPO, Johnson & Johnson and Mr Y made submissions about the conversion rates and processes.

Between February and May 2019 the adjudicator, TPO, Johnson & Johnson and Mr Y conversed about the calculation of the bonus.

Johnson & Johnson said again it believed that Mr Y’s benefit had been calculated correctly, while Mr Y said that he could not rely on Johnson & Johnson’s bonus figures as there was no evidence of any documented process, methodology or record keeping.

The case was considered by the adjudicator, who concluded that further action was required by the employer.

The employer agreed with the adjudicator that the 2012 figure was undervalued and said it would increase Mr Y’s final pensionable salary accordingly, in line with the adjudicator’s suggestion.

Johnson & Johnson also said that as a gesture of goodwill, it would write off the shortfall in employee contributions that were now owed and that it would make a payment of £1,000 in recognition of the distress and inconvenience Mr Y had suffered.

However, Mr Y did not accept Johnson & Johnson’s offer to put things right, and the complaint was passed to deputy pensions ombudsman, Camilla Barry, to consider.

Barry said that the complaint is upheld in part regarding the calculation of the 2010 bonus.

With regard to 2012, she said that since the start of the investigation, Johnson & Johnson has agreed to increase Mr Y’s pensionable earnings to the maximum allowed under the scheme earnings cap.

“Consequently, Mr Y’s recorded pensionable earnings are as high as they can be. I do not find it necessary to make a finding in relation to this year,” she added.



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