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Cost vs. benefit of Pension complaints

The Pensions Ombudsman has some key benefits as a venue for employees with pension grievances. Jurisdiction revolves around ‘maladministration’ which can be quite broad and for employees, costs aren’t a real issue.

However given the potential costs raised by these complaints employers and pension schemes often run up large legal and actuarial costs defending Ombudsman claims.

This can lead to some “challenging” cost to benefit analyses for Ombudsman complaints, particularly where there are arguments around payments for distress and inconvenience caused by proven maladministration.

An example being the recent High Court case of Smith v. Sheffield Teaching Hospitals NHS Foundation Trust [2017] All ER (D) 166 (Oct) where an employee who worked for the NHS lost the right to an unreduced pension due to bad information.

The Ombudsman and the Court both decided that she couldn’t have the unreduced pension, but that an award for inconvenience and distress was appropriate. The Ombudsman decided that she should get £500. The employee wanted £36k based on the Ogden tables. The Court decided it would award £2750.

The question is, how much time and effort did the employer end up spending on defending the claim? Given the outcome, it would have probably been better to carefully check the pensions communications in the first place!

Cost vs. benefit of Pension complaints

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