Ccht Pension Fund · CAS-94719-B9L5

CAS-94719-B9L5

Ombudsman’s Determination Applicant Mr Y

Scheme The CCHT Pension Fund (the Fund)

Respondent Trustees of the CCHT Pension Fund (the Trustees)

Outcome

Complaint summary

Background information, including submissions from the parties and timeline of events 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.

On 6 May 2022, CCHT exercised its powers under the Trust Deed and Rules that governed the Fund, dated 30 January 2004 (the Rules), to terminate its liability to pay contributions to the Fund. It directed the Trustees to commence winding up the Fund. An extract from the Rules can be found in the Appendix. CAS-94719-B9L5

• The Surplus was estimated to be around £970,000.

• Under the Rules, they had the power to consider whether the Surplus was used:

o to increase benefits payable to members and other beneficiaries;

o to provide a different benefit for or in respect of members and beneficiaries;

o to provide a benefit to anyone whose benefits have been forfeited; or

o a combination of these options.

• Any remaining balance was required to be returned to CCHT after the deduction of tax.

• They had provisionally concluded that 50% of the Surplus should be used to enhance the benefits of members whose pensions had been secured under the Policy. The other 50% should be returned to CCHT. In making their decision, they had taken into account:-

o The Surplus had arisen due to a combination of CCHT’s contribution payments and investment returns. Additionally, members had paid contributions into the Fund between 2006 and 2014.

o Members would be receiving the benefits to which they were entitled under the Rules.

2 CAS-94719-B9L5 • Before reaching a decision on the use of the Surplus, they were required to consider a number of factors and also a range of options. These included using all of the Surplus to enhance members’ benefits.

• They were satisfied, in the light of Mr Y’s representations, that their decision was fair and reasonable in the circumstances, and they intended to proceed on this basis.

• The Trustees’ decision had reduced the potential enhancement to members’ benefits.

• The Trustees had failed to disclose any impact assessment supporting their decision, despite claiming that they had taken advice.

• The window for those potentially impacted by the Trustees’ decision to comment was very short.

• He had been told that his complaint to The Pensions Ombudsman would affect the Fund. He considered this to be a direct threat intended to halt his legitimate complaint.

• It was unclear how his benefits would be enhanced.

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• the scope and purpose of clause 27 of the Rules;

• the interests of the members and the purpose of the Fund;

• the source and size of the Surplus;

• the size of the benefits accrued in the Fund, noting that the Fund was contracted- in to the earnings-related part of the State Scheme;

• the overall circumstances of the Fund;

• the current levels of high inflation and the inflationary protection provided by the Fund. This included the fixed 5% per annum increases granted on pensions accrued before July 2006;

• the costs of increasing members’ benefits;

• the impact of different potential uplifts to members’ benefits;

• the Fund’s statutory funding target; and

• the interests of CCHT.

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Adjudicator’s Opinion

• followed the relevant requirements of the Rules;

• interpreted the Rules correctly;

• took into account the appropriate factors when reaching their decision; and

• made a reasonable decision.

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• the source of the Surplus;

• the interests of the members of the Fund;

• the interests of CCHT;

• the fact that member benefits had been secured in full and the level of inflation protection provided; and

• the fact that CCHT had made significant deficit recovery payments to ensure that the Fund’s statutory funding objective was met.

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Mr Y did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Mr Y did not provide any new evidence or comments in response to the Opinion.

I agree with the Adjudicator’s Opinion.

Ombudsman’s decision

“For the purposes of the investigation or determination of any complaint or dispute, the Pensions Ombudsman shall not make any findings of fact to the effect that a person responsible for the management of an occupational pension scheme had failed to comply with the requirements under the following provisions of the 1995 Act: (b) section 37 and 76 (payment of surplus or excess assets to the employer)”.

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I do not uphold Mr Y’s complaint.

Anthony Arter CBE

Deputy Pensions Ombudsman 1 November 2023

8 CAS-94719-B9L5 Appendix Extract from the Fund’s Trust Deed and Rules dated 30 January 2004

“27. TERMINATION AND WINDING UP

(1) The Scheme will terminate:

(a) on the effective date of any termination by the Principal Employer of its liability to contribute to the Scheme; […]

(2) At any time after the Scheme terminates, the Trustees may decide to wind it up. Subject to the power to defer winding up conferred on them by section 38 of the Pensions Act 1995, the Trustees must wind up the Scheme if so directed by the Principal Employer (as long as the direction is given before an order has been made against the Principal Employer, or it has passed a resolution, for its winding up).

(3) If the Scheme winds up, the Trustees must pay from the Scheme all expenses and liabilities incurred in administration and management of the Scheme or in connection with its termination or winding up and any unpaid benefits which became due before the winding up began.

After paying (or reserving for) those items, the Trustees must apply the remainder of the Scheme’s assets towards satisfying its liabilities […]

(4) If any assets of the Scheme remain after the Trustees have satisfied the Scheme’s liabilities under subclause (3), the Trustees may use all or part of them in one of more of the following ways as long as that is consistent with Approval:

(a) to increase a benefit provided for or in respect of any person under subclause (3);

(b) to provide a different benefit for or in respect of any of those persons;

(c) to provide a benefit for or in respect of any person whose benefits have been forfeited under clause 19.

(5) Any assets of the Scheme which ultimately remain must, subject to compliance with section 76 of the Pensions Act 1995, be paid (less tax) to the Employers participating in the Scheme on the termination date, in proportions the Trustees decide.”

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