The Law Commission published its report on Technical Issues in Charity Law in September 2017 following a public consultation.
The recent Pensions Ombudsman case involving Police Scotland and a chief constable in the force raises the question again; what is the extent of an employer’s duty of care to its employees, as pension scheme members, to inform them of their rights as members of the scheme? Whilst the Pensions Ombudsman might not have given a definitive answer in its judgement, it is clear Police Scotland’s notable disengagement with the queries of Mr N, the chief constable, fell well short of this duty.
Mr N was part of the Lothian Pension Fund, which in turn was part of the Scottish Local Government Pension Scheme. The administrator of the scheme was the Scottish Pension Authority (SSPA).
The SSPA issued a circular in February 2017 outlining a change to actuarial guidance that would affect the scheme members who took late retirement as from 24 June 2017. The effect of the change was to make the enhancement of pensions for those taking their pension after normal pension age less generous. The circular made clear that this change was not being introduced immediately in order to give members the opportunity to retire on the more generous terms if they wished to. At the age of 68 years and 7 months, Mr N was a late retirement member, as the retirement age of the scheme was 65 years. He did not find out about these changes until March 2018 when he discovered it by accident.
Mr N raised a query with the Lothian Pension Fund and said that the failure to inform him of the changes had resulted in a reduction in the pension to which he was entitled. The Fund informed him that an employer bulletin had been sent to Police Scotland, Mr N’s employer, in February 2017. Mr N was informed by his employer that he had not been on the circulation list to be shown this bulletin and it rejected Mr N’s attempts to raise a grievance arguing that the grievance procedure was not the appropriate route. It did not address Mr N’s concerns in any other way.
The Ombudsman held the view that Police Scotland had received the bulletin in February 2017 and had had enough time to inform Mr N before the implementation of the late retirement factors. It rejected Police Scotland’s view that the obligation was on the Fund as the scheme’s manager, and not the employer, to keep relevant employees informed. The duty was firmly placed on Police Scotland’s shoulders; it was their responsibility to notify Mr N of the changes.
The Ombudsman directed that Police Scotland should treat Mr N as though he had retired on 23 June 2017 (the day before the changes took place) and calculate his benefits accordingly. He would further be paid any arrears owing to him based on that retirement date. His future payments would similarly be calculated on such a basis and Police Scotland were directed to pay Mr N £2,000 in recognition of his distress and inconvenience. Additionally, the Ombudsman highlighted that their failure to respond to enquiries within the specified timescales showed that they had not treated Mr N’s complaint with the degree of respect and care that one would expect of an employer towards its employees.
Key take-away points
- Whilst employers are not required to advise their employees about their pensions, the Pensions Ombudsman has made clear that they are required to provide relevant information to their employees.
- When notified of changes to pension scheme rules or practices, employers must not assume that it is the responsibility of the scheme or the fund or its administrators to inform their employees; they must liaise with these stakeholders to ensure that employees are not left in the dark.
- Refusing to engage or process concerns raised by members, either through existing employment procedures or at all, is not acceptable and is likely to result in higher awards for distress and inconvenience by the Pensions Ombudsman.
- Employees might not know in the first instance who to contact with pension concerns and so it is the employer’s duty of care to assist in signposting an employee if they are not best placed to deal with the query.
- If faced with a Pensions Ombudsman complaint, employers should ensure that they respond to any requests for information within the specified timescales and to notify the Ombudsman if any extension of time is required.
For more information on this please contact Alice Kinder.
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