Teachers Pension Scheme · CAS-45784-C3T2

CAS-45784-C3T2

Ombudsman’s Determination Applicant Mr E

Scheme Teachers' Pension Scheme (the Scheme)

Respondent Teachers’ Pensions (TP)

Outcome

Complaint summary

Background information, including submissions from the parties The sequence of events is not in dispute, so I have only set out the salient points. I acknowledge there were other exchanges of information between all the parties.

1 Teachers’ Pensions CAS-45784-C3T2

“E30 Commencement and duration of long-term family pensions

…

(3) Unless the Secretary of State determines otherwise in the particular case, and subject always to regulation E1(3)(c) and (d) (guaranteed minimum pension for surviving spouse), an adult pension is not payable during or after any marriage or period of cohabitation outside marriage.”

the Newsletters) with their end of year tax certificate (the P60)

1 The 1997 Regulations were later revoked by the Teachers' Pensions Regulations 2010 (the 2010

Regulations) with effect from 1 September 2010. There are however saving provisions under the 2010 Regulations in Schedule 13 Part 2. The saving provisions mean that anything done, or having effect as if done under or for the purposes of a provision of the 1997 Regulations, has effect if it could be done under, or for the purposes of the corresponding provision of the 2010 Regulations, as if done for the purposes of that corresponding provision. 2 CAS-45784-C3T2 The 2007 Newsletter contained the following warning:

“Please inform us:

…If you receive a pension by virtue of being the dependant of a deceased member and subsequently enter into a new partnership

…

Failure to notify Teachers’ Pensions of such changes may result in an overpayment of pension which must be recovered [original emphasis in bold]”.

TPO is also aware from past cases that more recent Newsletters emphasise the importance of TP having up to date information. The April 2016 Newsletter contained the following warning:

“Important:

To ensure the correct pension is paid to you, it’s vital that we have your most up to date information on our records”.

“Please tell us:

If you remarry, enter a civil partnership or cohabit and you are in receipt of a spouse’s, civil partner’s or nominated financial dependant’s pension, provided by a person who retired or ceased pensionable service before 1 January 2007... [original emphasis].”

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• It had incorrectly informed him that his widower’s pension would continue to be paid on his remarriage.

• The information in the Scheme leaflets, and on its website, confirmed that payment of his widower’s pension would cease on remarriage.

• Mr E was sent a Newsletter each year with his P60. It included a section on changes that TP needed to be informed of, including when a pensioner in receipt of a widower’s pension remarries. The section ended with the wording: “any overpayment of pension as a result of you failing to notify TP of such changes will be recovered.” This should have alerted Mr E to the possibility that his remarriage may have an impact on his pension.

• He and his current wife made financial decisions based on information provided by TP that confirmed his widower’s pension from the Scheme would continue for life. Based on that information, they decided that his wife could stop working in early January 2016.

• They considered that his widower’s pension from the Scheme would allow them to maintain a reasonable standard of living. His wife wanted to stop working to help support their elderly parents. While his parents are now deceased, their care had involved a lot of travelling.

• The termination of his monthly widower’s pension of £669.75 had impacted them both financially.

• Repayment of the sum that TP was seeking to recover would cause them serious hardship. It would also adversely impact their ability to continue to support his wife’s parents.

• They did not save any of the overpayments of the widower’s pension. It was treated as their joint income. They lived within their means, and they did not have expensive foreign holidays or buy new cars. They shopped at budget supermarkets.

4 CAS-45784-C3T2 • He acknowledged that the 2007 Change applied where the late member had completed pensionable service after 31 December 2006, and Mrs E’s pensionable service ended on 31 August 2006. However, he considered that TP and/or the Department for Education (DfE) should agree a compromise and allow him to benefit from the improvement to the Scheme spouse’s provisions.

• Mr E would have received four Newsletters between the date of his enquiry in 2011 and the date he remarried. However, he did not make any further enquiries to TP.

• It had offered Mr E a repayment plan. This would involve him making 50 monthly payments of £654.50. The proposed repayment plan would be over the same period that the overpayments accrued. When TP asked for his comments, Mr E did not suggest an alternative plan.

• HM Treasury’s Managing Public Money Guidelines2 (the Guidelines) made it clear that any overpayment of public money should be recovered. However, if the cessation of the widower’s pension and/or the recovery of the overpayments would cause Mr E hardship, it could consider reinstating the widower’s pension or an alternative recovery plan. This would require Mr E to submit a ‘Statement of Income and Expenditure’ (SoIE) with supporting evidence. Mr E had been provided with a blank SoIE, but had not completed and returned it.

• The DfE had offered Mr E a distress and inconvenience payment of £500, which could be offset against the sum that TP was seeking to recover from him.

Adjudicator’s Opinion

Legal Issues arising in this particular case

• Mr E accepted that his widower’s pension should cease going forward, in line with the 1997 Regulations;

5 CAS-45784-C3T2 • Mr E disputed whether the past overpayments should be recovered, and to the extent that Mr E had to repay the overpayments, considered that a longer period of recovery was appropriate; and

• Mr E argued that, as a consequence of the negligent misstatement by TP on which he had relied on, he had sustained a financial loss.

• change of position;

• estoppel;

• limitation or laches where limitation is not available as a defence;

• contract; and

• hardship.

Future pension payments

Negligent misstatement claim

• the trustees or manager owed the person to whom the negligent misstatement was allegedly made a ‘duty of care’ (generally trustees of trust based schemes and managers of Public Sector Schemes owe a duty of care to beneficiaries);

• there was a breach of the duty of care (that is the information provided was not correct and could not be made by someone exercising reasonable care);

• the person to whom the information was provided reasonably relied on the representation and had suffered loss (the “but for” test is satisfied); and

6 CAS-45784-C3T2 • the loss suffered was not too remote (it was of the kind falling within the scope of the duty of care).3

• did the appellant rely on the statements;

• was the reliance reasonable; and

• would the appellant have acted differently if they had been told the correct position.4

3 See Hagen v ICI Chemicals [2001] 64 PBLR for a useful discussion of how the principles apply in negligent misstatement cases from [77] to [140]. 4 Corsham v Police Commissioners for Essex [2019] 074 PBLR (042); [p2019] EWHC 1776 (Ch), Morgan J at paragraph 173. 5 including the leaflets and Newsletters.

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Past overpayments

Repayment claim

• change of position;

• estoppel;

• limitation;

• contract; and

• hardship.

Change of position

• good faith - the recipient of the overpayment must be acting in good faith;

• detriment - their circumstances must have changed detrimentally as a result of the overpayment or in anticipation of receiving it. Generally, this meant that the money must have been spent and the expenditure could not be legally or practically reversed, or any asset bought with the overpayment could not be easily sold; and

• causation - there must be a causal link between the change of position and receipt of the overpayment (as a minimum it is necessary to show at least that “but for” the mistake the applicant would not have acted as they did).

6 Lipkin Gorman (a firm) v Karpale [1991] 2 AC 548 as per Lord Goff at paragraph [580C ]. Lord Goff set out this principle in general terms and the courts have subsequently developed principles about where such a defence applies. 8 CAS-45784-C3T2

Good faith

Detriment

7 See Webber v Department for Education, Teacher's Pensions [2012] EWHC 4225 (Ch) and Webber v Department of Education which applied the earlier test in Niru Battery Manufacturing Co v Milestone Trading Ltd [2002] EWHC 1425 (Comm) in a pensions context. 8 See for example Abouh Ramah v Abacha [2006] EWHC Civ 1492 Armstrong DLW GmBH v Winningham Networks Ltd [2012] EWHC 10 (Ch) at [110]. 9 See Scottish Equitable v Derby [2000] PLR 1 (CA) at [33]. 10 Philip Collins Ltd v Davis [2000] 3 All ER case (cited with approval in Scottish Equitable v Derby).

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Causation

11 National Westminster Bank plc v Somer International UK Limited [2002]. 12 Scottish Equitable v Derby [2001] 3 All ER 818, Harrison J at paragraphs [37]-[41].

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Distress and inconvenience

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TP did not accept the Adjudicator’s Opinion, and the complaint was passed to me to consider. In response to the Opinion, TP provided its further comments which are summarised in paragraphs 70 to 74 below.

TP referred to the Determination for an earlier complaint (CAS-42089-N4Y0). In that Determination I stated that:

“I do not find it credible that Mr T disposed of the Newsletters relating to his pension without reading any of them… they made it sufficiently clear that TP should be notified of any change in his marital status. On the balance of probabilities, I find that Mr T did read one or more of the Newsletters. This would have put him on notice that his widower’s pension might be affected by his remarriage. At that point in time, he should have taken steps to clarify the position with TP. The fact that he did not do so means that a change of position defence is not now available to him.”

TP also referred to a Preliminary Decision that I issued for a similar case. However, this case did not go to Determination, and it is not in the public domain. So, I shall not quote from it in detail here. My conclusions in that case were similar to those in CAS- 42089-N4Y0. I also said that I was satisfied that TP exercised reasonable diligence by informing pensioners, via the Newsletters, to notify it if they cohabit with a partner, or remarry.

In conclusion, TP said that:

• the Newsletters sent to Mr E were an adequate form of notification;

• Mr E was expected to read the Newsletters and keep TP updated of any change of status;

• Mr E was put on notice that his entitlement to his widower’s pension might be affected by remarriage (despite the 2011 email communication);

• Mr E failed to act in good faith when he did not notify TP of his remarriage. So, he was unable to avail himself of the change of position defence; and

12 CAS-45784-C3T2 • accordingly, Mr E’s complaint should not be upheld, and TP should be entitled to pursue repayment from Mr E in full.

If the cessation of Mr E’s pension, or the recovery of the overpayment would cause him financial hardship, it can contact the DfE to request that the pension either be reinstated, or the overpayment written off. However, this would require Mr E to complete a SoIE, which he has chosen not to do.

I have considered the additional points raised by TP. However, they do not change the outcome, and I agree with the Adjudicator’s Opinion.

Ombudsman’s decision

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Directions

• notify Mr E that it will not be seeking to recover any of the overpayments; and

• pay Mr E £500, in respect of the significant non-financial injustice he has sustained as a consequence of the maladministration on the part of TP. This sum includes the offer of £500 already made by the DfE.

Dominic Harris

Pensions Ombudsman 5 December 2025

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