The Pensions Ombudsman (TPO) has upheld a complaint against Teachers' Pensions (TP), after it found that TP had provided the complainant with incorrect information, which he relied on to his financial detriment. 

The complainant, Mr E, said that, before he retired, he was misinformed by the Teachers' Pension Scheme (TPS) administrator, TP, as to the length of his pensionable service and accrued pension benefits in the TPS.

As a result, he left teaching for a consultancy position earlier than he otherwise would have done, and is in receipt of lower pension benefits than anticipated.

TP acknowledged that it had provided Mr E with incorrect information, and there was no dispute that there had been maladministration on the part of TP by providing the inaccurate information and his benefits. 

However, TP argued that it is only able to pay the benefits payable under the TPS, and cannot provide ultra vires benefit. 

TPO clarified though, that this does not mean that Mr E could not have a claim in negligent misstatement and could be entitled to monetary compensation if he can demonstrate he has sustained loss. 

"While the manager/administrator is not in a fiduciary relationship, there is a sufficiently proximate or special relationship between the manager and the member of the scheme for a duty of care to arise in negligence," pensions ombudsman, Dominic Harris, stated.

"The regulations of such schemes are complicated and difficult for members to understand. The members are reliant on the managers/administrators to administer the scheme correctly."

Harris also said that while managers and administrators of statutory public service schemes often seek to escape liability for inaccurate statements by including disclaimers of liability in benefit quotations, this is not always a “get out of jail free card”.

"It is still a question of fact whether it was reasonable for the member to rely on the inaccurate statement in the circumstances of the case, having regard to things said and done by TP," Harris sated.

"These all form part of the factual matrix relevant to the issue of whether it was reasonable to rely on the inaccurate statement. A disclaimer by itself is not always conclusive."

According to Harris, TP had effectively argued that the disclaimer is sufficient to negate any duty of care which might otherwise be owed by TP to Mr E in relation to the accuracy of the information in the statements /or that it was not reasonable to rely on the statement in the circumstances of the case because of the disclaimer.

TP also argued that Mr E should have questioned the increase in his projected pension entitlement and requested evidence of why the service total had changed.

However, Harris pointed out that Mr E did exactly this in a telephone call soon after receipt of the first inflated explanation of benefits (EOB) statement, which he received in February 2014, and was reassured that the figures were correct and given a plausible explanation for the sudden increase in his pension benefits.

"The clear, verbal reassurances provided to Mr E in the telephone call that his initial EOB statement was correct have led me to agree with Mr E that, in the circumstances, it was reasonable for him to have relied on the information provided," Harris stated.

"TP had the opportunity to tell Mr E at this point that he should not be relying on the information, or that his pensionable service record would need a final verification check at point of retirement but did not do so.

"While in the normal course disclaimers of the type included in the EOB statements by TP would generally be sufficient to prevent reliance on such a statement, on the facts of the case, TP by its later actions did assume responsibility for reliance on the statement that Mr E was entitled to the extra five years reckonable service, and in those circumstance it was reasonable for Mr E to rely on the assurances given to him when he checked the position with TP.

"TP confirmed that Mr E could rely on the statement and at that point assumed liability for the accuracy of the statement, notwithstanding the general disclaimer in the EOB."

The ombudsman ordered TP to make a lump sum damages payment sufficient to put Mr E in the position he would have been in if he had continued to work in his previous job with the school until 31 August 2018 and continued to own the rental property, before moving to the consultancy role and buying his house, and then taken his TPS pension from 4 May 2020.

TPO also outlined further factors for TP to consider as part of this calculation, given the complexities of the case.

Harris also awarded £1,000 compensation for non-financial injustice, noting that, after the initial errors in 2013, the misinformation continued for seven years.

"Mr E has understandably said that finding out about his reduced pension in 2020, at the time he had planned for some years to draw it, had a significant impact on his mental and physical health and has caused a significant disruption to his retirement planning resulting in him having to continue to work to enable mortgage," he stated. 

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