Welcome to the latest edition of our regular pension disputes bulletin. In these bulletins we report on key cases, Ombudsman decisions and regulatory activity and we highlight emerging risks for pension schemes, providers, sponsors, administrators and other service providers.

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1. AUTO-ENROLMENT

1.1 Auto-enrolment opt-out period had not started as enrolment information contained incorrect enrolment date – Ian Moan v Revenue and Customs Commissioners [2022] UKFTT 118 (TC)

Risk warning

  • An individual may still have a right to opt-out of an auto-enrolment scheme many months or, potentially, years after they have been enrolled where the enrolment information they were given was incorrect in some respect.

Facts

Mr Moan was automatically enrolled into his new employer's pension scheme (the Scheme) operated by Aegon despite having repeatedly said that he did not want to join the Scheme because he was likely over the lifetime allowance and did not want to lose the opportunity to register for fixed protection.

Mr Moan's employment commenced on 17 October 2016. His new employer purported to postpone his enrolment into the Scheme by 3 months and they notified Aegon of this on 12 December 2016. Aegon gave effect to this and Mr Moan was eventually enrolled into the Scheme on 6 March 2017, although his membership was backdated to 1 February 2017.

Mr Moan's employer had not provided Aegon with a personal email address for Mr Moan. Consequently, Aegon sent emails about Mr Moan's enrolment into the Scheme and his right to opt-out to his employer. These emails were then forwarded on by the employer to Mr Moan's work email address. The email was not altered in any way (other than a warning message that was added to the email making clear that it came from an external sender and not his employer). This heading meant it could appear to be a spam/junk email.

Mr Moan had persistent difficulties accessing emails on his work account; emails were frequently deleted, servers crashed, and attachments often didn't appear. His employer also began operating an online payslip system in January 2017, which he was unable to access until June 2017

Mr Moan claimed he had not seen any emails from Aegon regarding his enrolment into the Scheme. This included an email sent to him on 6 March 2017 which confirmed that Mr Moan had been enrolled into the Scheme and reminded him of his right to opt-out. An internal investigation carried out by his employer concluded that this email had reached Mr Moan's email account, but could not tell whether it had been opened. Critically, this email stated that his enrolment date was 1 February 2017, which the judge held to be incorrect.

Mr Moan finally got access to his online payslips in June 2017, and noticed that he was paying pension contributions. He requested for these to be cancelled and for his contributions to be withdrawn. His employer forwarded this request on to Aegon. However, Aegon refused to cancel his enrolment on the basis that he not validly opted out of the Scheme. At the same time, Mr Moan sought to register for fixed protection. This was initially granted by HMRC. However, it was subsequently revoked when HMRC became aware that he had become a member of the Scheme and had accrued benefits under it.

Mr Moan contested HMRC's decision, arguing that he had opted-out of the Scheme. However, HMRC rejected this on the basis that notice to opt out must be delivered within 30 days after the later of:

  • the date on which Mr Moan was automatically enrolled into the Scheme, and
  • the date on which he was "given" enrolment information.

Submissions

Mr Moan appealed HMRC's decision to the First Tier Tax Tribunal and argued he was still entitled to opt-out of the Scheme on the basis that the enrolment information had not been "given" as required under Regulation 9(2)(b) of the Occupational and Personal Pension Schemes (Automatic Enrolment) Regulations 2010 (the Enrolment Regulations). He asserted this on on two grounds:

  • that the enrolment information had not been "given" to him because he had not knowingly received it; and
  • the fact the enrolment date stated in Aegon's email was incorrect meant he had not been "given" the enrolment information.

Decision

The Tribunal Judge considered these points in reverse.

In relation to the second point, the judge found that the enrolment date stated in Aegon's email of 6 March 2017 was incorrect on the basis that the employer's attempt to postpone Mr Moan's enrolment was too late, which meant it was invalid. As such, Mr Moan should have been automatically enrolled by 17 October 2016. Even if notice of deferment had been given on time, the maximum permitted deferral would have been to 17 January 2017, meaning 1 February 2017 was never a possible auto-enrolment date.

Paragraph 2 of Schedule 2 to the Enrolment Regulations requires a member's auto-enrolment date to be included in the enrolment information provided to the member. The judge held that as the date contained in Aegon's email was "clearly" incorrect, the opt-out period had not started.

Consequently, he held that the opt out notice delivered by Mr Moan, delivered (as it was) before the correct enrolment information had been given to him, must have been delivered before the statutory deadline (of one month after the enrolment information had been given to him). On this basis, he allowed the appeal.

Despite reaching this decision, the judge went on to consider, what his decision would have been had the enrolment information been accurate. Had that been the case, the judge held that the information had been "given" to Mr Moan even though he claimed not to have seen it. The judge found that, on the balance of probabilities, the email was likely received and that Mr Moan had likely deleted it, either without opening it, or mistakenly dismissing as junk mail.

He held that where a recipient is known to use an email address and has not objected to its use, any information sent to that address must generally be regarded as given. Therefore, if the information had been accurate, the appeal would have been dismissed and Mr Moan would have lost his right to register for fixed protection.

Comment

The Tribunal Judge's decision was clearly helpful for Mr Moan for whom he seemed to have some sympathy. However, if it is followed in other scenarios it could have significant and potentially wide-ranging implications. For example, if a member can show that their initial enrolment information contained incorrect information (or an auto-enrolment scheme otherwise becomes aware of this) this decision would suggest that the member's opt-out period never started. In this scenario, would affected members need to be given be given another opportunity to opt-out? What if they have already been a member for some time?

The decision regarding the means of communication offers some comfort to schemes that provided they have sent enrolment information to a valid email address which belongs to a member, the information is likely to be deemed to have been "given" for the purposes of the Enrolment Regulations even if the member does not read it, deletes it or it ends up in their junk folder.

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