Pensions Ombudsman highlights importance of administrators adhering to commitments

In the decision, the PO criticised an administrator for failing to provide a member with pension savings statements (PSS) when its website indicated they would be sent automatically. This determination highlights the importance of administrators adhering to commitments made to members, even where those commitments are not required by legislation.

The dispute involved Dr S, who was a member of the 2008 section of the NHS Pension Scheme (2008 section) and the separate 2015 NHS Pension Scheme (2015 scheme).

If a member exceeds the annual allowance in a tax year, they must be sent a PSS by 6 October the following tax year. The annual allowance was £40,000 in the relevant tax years. In addition, if the member requests a PSS, it must be provided within three months. These deadlines are extended where an administrator is waiting for information from the member’s employer, in which case the PSS must be provided within three months of the information being received.

On 24 November 2018, Dr S’s financial adviser contacted the administrator to ask for PSS for the tax years 2016-17 and 2017-18. On 5 December, the administrator sent Dr S a PSS for 2017-18 in relation to the 2015 scheme only. On 1 January 2019, Dr S’s financial adviser asked for the missing PSS. On 9 January, the administrator told the financial adviser that the 2017-18 PSS for the 2008 section would be provided but there was a three-month timescale for providing the 2016-17 PSS. The financial adviser noted this timescale should run from the original request in November 2018.

On 28 February 2019, Dr S opted out of the 2015 scheme.

On 25 March 2019, the administrator sent Dr S a PSS for the 2015 scheme and a PSS for the 2008 section in relation to 2016-17. The cover letters both stated that the PSS had been sent because his benefits in the relevant scheme had grown by more than £40,000 over the tax year, his benefits across the 2008 section and the 2015 scheme combined had grown by more than £40,000 over the tax year, or he had requested the PSS.

The PSS showed that Dr S’s benefits across the 2008 section and the 2015 scheme had grown by more than £40,000.

In September 2019, Dr S phoned the administrator to ensure he would receive his PSS for the 2018-19 tax year and was told he would if his pension growth exceeded £40,000.

Dr S contacted the administrator again in October because he had not received his PSS. He was told that details from his employer had not been received in time to meet the 6 October deadline and that he would receive the PSS by 26 December 2019. On 27 December, Dr S phoned the administrator again and was told he would receive the PSS within 10 working days. He was also advised to contact the administrator’s annual allowance department to ensure it was aware of his need for a PSS.

On 1 January 2020, Dr S emailed the annual allowance department. He received a notification that his email had been deleted without being read. On 13 January, Dr S contacted the administrator because he had still not received his PSS; he was provided with “interim” figures over the phone. He was told that final figures would be with him by the end of the week. On 20 January, Dr S contacted the administrator. He was told the PSS wasn’t ready but would be with him in a few days. He received the PSS, dated 3 January, on 23 January, highlighting that his pension growth across the two arrangements had exceeded £40,000.

Dr S complained that his understanding was that the administrator would contact members when their pension growth exceeded £40,000, which was confirmed on the website. Dr S also complained that the administrator had not provided his PSS, or had not provided it in a timely fashion, for 2016-17 or 2017-18. This had prevented him from opting out of the 2015 scheme in time to avoid the annual allowance charges in 2017-18 and 2018-19. Finally, Dr S complained that the administrator had failed to comply with its three-month timescale to provide his 2018-19 PSS, which had left him trying to complete a tax return with uncertain figures.

The administrator responded to Dr S’s complaint. It explained its process for issuing PSS and apologised for failing to issue the 2016-17 and 2018-19 PSS within the normal timeframe. Dr S asked for his complaint to be escalated. The administrator responded again and stated that it was not required to provide Dr S with PSS in respect of the relevant tax years, because he did not exceed the annual allowance in a single scheme, only across his two NHS arrangements. The administrator also responded stating that although it tried to provide PSS where members exceeded the annual allowance across the two arrangements, it was not obliged to do so. Despite the administrator apologising for failing to meet the statutory timescales to provide his PSS when requested, Dr S complained to the PO.

The PO found that the administrator had committed to providing PSS where members exceeded the annual allowance across their two arrangements. This commitment was on the website and repeated in the letters sent to Dr S. It was therefore reasonable for Dr S to assume he would receive the information automatically and it was maladministration for the administrator to break this commitment. It was also maladministration for the administrator not to provide the 2016-17 and 2018-19 PSS within three months of Dr S’s request, as this was a breach of the statutory timescale.

The PO awarded Dr S £1,000 for distress and inconvenience, which he noted would have been exacerbated by receiving the 2018-19 PSS six working days before the self-assessment deadline. He did not, however, award compensation for financial loss, noting that the additional pension Dr S had earned would likely exceed the annual allowance charge.