Update from the Pensions Ombudsman
There have been several interesting Ombudsman determinations recently, including one on early retirement rights and TUPE and one on recovering overpayments.
TUPE and early retirement: S was a public sector employee with a right to retire unreduced from 55. She was TUPE-transferred to G4S in 2011 and then back to her original employer in 2019. She rejoined the Scheme in 2019 where she had deferred benefits from 2011. She applied for unreduced early retirement at 55 but was told she was not eligible for this in her new section. S complained.
The Ombudsman determined that under the public sector Fair Deal terms, S should have been readmitted to her original section of the Scheme. However, Fair Deal was only a policy, not legislation, and the Ombudsman could not give any directions in relation to compliance with it.
He went on to consider what rights had transferred under TUPE. Although old age benefits are exempt from the transfer of rights under TUPE, this only applies to rights at the end of an employee’s normal working life. The right to take benefits unreduced at 55 was not an old age benefit and therefore transferred to G4S in 2011 and back to S’s original employer in 2019.
However, the requirements of TUPE did not override the rules of the Scheme, which contained no mechanism for S to be paid an unreduced benefit at 55. This meant that her employer was directly liable to pay any shortfall in her benefits and the Ombudsman directed it to purchase an annuity and pay any additional lump sum due.
This determination illustrates the complex issues that can arise in relation to early retirement benefits on TUPE transfers. The Government issued a call for evidence on TUPE earlier this year and it is to be hoped they address the issues on early retirement benefits.
Recovery of overpayment: N was incorrectly paid a duplicate lump sum of £8,250 in 2016. She was later told that her pension had been underpaid and part of the overpayment would be recovered from the arrears due. N did not agree to this as she said she had made irrevocable financial decisions and complained.
The Ombudsman said that N should have realised one payment was made in error but the scheme could not recover a disputed overpayment by offsetting it against arrears without an “order of a competent court”, which did not then include the Ombudsman. However, amended legislation now provides that an Ombudsman determination will suffice for these purposes.
This is a reminder that disputed overpayments cannot be offset against benefits until the dispute is resolved or there is a court order or Ombudsman determination.
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