Providing pensions can be a thankless task for employers and
providers alike. It's an experience that a number of employers
have got to know well since the UK introduced its auto-enrolment
Where employers are unhappy with their pension provider there
will usually be contractual provisions on how to terminate the
relationship. However, what happens when there's a dispute or
the contractual route doesn't seem to be working? Won't
that involve an expensive and legally draining dispute between
provider and employer with little financial incentive for the
employer to pursue it?
The Pensions Ombudsman
The answer seems to be no, as demonstrated in a recent Pension
Ombudsman's decision brought by Coker Engineering Limited (the
In short the Company put in place its auto-enrolment solution
with a provider. It wasn't particularly happy with the service
provided due to issues with contribution calculation and
administration charges, and its staff were not happy either. It
sought to switch to an alternative provider (over several months)
and things weren't working out with the provider holding on to
the pension contributions from the Company and its employees for
seven months rather than co-operating with the transfer.
The Ombudsman's decision
The Company complained to the Ombudsman citing maladministration
by the provider. The provider did not respond to the complaint
(which is error number one with the Ombudsman's procedure) and
the result of all this was that the Ombudsman ordered the provider
reconcile and confirm the contributions held for the
arrange for the relevant employee funds to be transferred to
the new provider;
waive all termination fees (which had been offered by the
provider previously); and
pay £500 to the Company for the maladministration.
The Pensions Ombudsman is set up to hear this sort of complaint
and it can provide a quick and simple way to deal with disputes of
this nature. For smaller employers faced with issues with
their pension provider it can be a very sensible way to deal with
what can otherwise be a bit of a minefield.
It is worth noting in this case that the provider would probably
have considered that they did nothing wrong but ended up on the
wrong end of the decision. The big takeaway (other than a reminder
that employers can bring Ombudsman proceedings) is that you ignore
the Pensions Ombudsman at your own peril. Its decisions can be
enforced as County Court judgments and, if you've missed your
chance to argue the facts here, the chance of raising a point of
law in an appeal is a bit of a forlorn hope most of the time.
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An assignment of rights under a contract is normally restricted to the benefit of the contract. Where a party wishes to transfer both the benefit and burden of the contract this generally needs to be done by way of a novation.
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