Police and Crime Commissioner for Greater Manchester v
Butterworth and Anor 2016
B was employed by the Greater Manchester Police Authority (the
"Authority") and was a member of its
pension scheme (part of the Local Government Pension Scheme).
Pursuant to the regulations governing the Local Government Pension
Scheme (the "Regulations"):
(i) a deferred member could opt to take a pension from the age
of 55 with the consent of the Authority; and
(ii) the Authority had the power not to apply a reduction for
early payment if they deemed "compassionate grounds" were
Due to the worsening of the relationship between B and the
Authority, they entered into a compromise agreement regarding
B's termination of employment. A clause within the agreement
stated the following:
"To the extent that it is and remains lawful for the
Employer to do so and upon receipt of a written request from the
Employee in accordance with the Regulations... the Employer will
allow the Employee to access her pension without reduction...when
she reaches 55..."
When B reached age 55 in February 2014, she applied for an
unreduced early retirement pension from age 55. The request was
declined. The Police and Crime Commissioner for Greater Manchester
(the Authority's successor) (the
"Commissioner") held that the Authority
was not obliged to grant an unreduced pension as the Regulations
required not only the Authority's consent, but that the
Authority must also be convinced that there were suitable
"compassionate grounds" to grant an unreduced pension. B
took her complaint to the Pensions Ombudsman.
Complaint to the Pensions Ombudsman
In April 2016 B's compliant was upheld. The Ombudsman found
the Pension Clause of the compromise agreement to be void and
unenforceable and was an unlawful fetter on the exercise by a
public authority's discretion. The Ombudsman, however, held
that contractual estoppel had arisen, and that the Authority could
not go back on a promise it previously made, and so B was to be
granted a bridging pension equivalent to the entire amount of her
unreduced pension from when she reached age 55 (in February
The Ombudsman also provided an unusually generous award of
£2,000 for maladministration.
The High Court overturned the Ombudsman's decision
The High Court allowed the appeal on the grounds that:
the Ombudsman misinterpreted the
Pension Clause, in that it still complied with the Regulations as
it would only
allow B to access an unreduced pension at age 55 to the extent that
it was lawful for the Authority to do so (i.e. employer consent was
required and there
needs to be a finding of compassionate grounds);
the employer was under no contractual
obligation to provide an unreduced early
retirement pension (as the Regulations had to be satisfied prior to
granting the unreduced pension); and
the Ombudsman's finding of
contractual estoppel was flawed and unsustainable because there was
no binding agreement between the parties.
The Court further held that there had been no maladministration
as the Ombudsman's finding of maladministration was based on an
"erroneous interpretation" of the clause of the
During the appeal the Ombudsman asked the Court to uphold its
determination on a different ground, in that the compromise
agreement was not contractually enforceable as a matter of private
law. Alternatively, the Ombudsman wanted the Court to remit the
matter back to him to determine that B's complaint should have
been upheld on the basis of B having a legitimate expectation to
receive an unreduced pension. Both requests were refused by the
The Ombudsman's participation in the High Court reflects its
more robust stance in making decisions where he considers that this
would benefit the pensions industry. This case, however, seems to
only undermine the Ombudsman's standing as the Court held
(i) the Ombudsman's initial decision was wrong;
(ii) the arguments for contractual estoppel was flawed; and
(iii) the clause within the compromise agreement was interpreted
Adding insult to injury, the Ombudsman made submissions to the
Court accepting that the submissions were contrary to the original
legal analysis of the complaint, and requested for the case to be
remitted back to him, providing arguments which did not form the
basis of his original decision. For some it will be reassuring that
the Ombudsman in this case was protective of the individual (as
awards and determinations do not usually penalise the trustees or
employers so severely), though this case appears to be a rare and
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