Hughes v Woolworths Group Pension Trustee Ltd

A pension rule providing an incapacity pension on retirement does not require a formal application before retirement, although the trustee must have sufficient information to assess incapacity. The entitlement arises only where the member actually retires from service because of incapacity. Redundancy for reasons unrelated to ill health is not retirement for that purpose.

Where maladministration concerning one pension issue causes a member to delay pursuing a separate ill-health claim, compensation is available only for injustice sustained in consequence of the maladministration. A lost opportunity to obtain a different benefit is not recoverable where the relevant conduct was bona fide and did not cause the failure to pursue that benefit. During a Pension Protection Fund assessment period, statutory restrictions may cap benefits by reference to the compensation available under the Pensions Act 2004.

Mr Hughes appealed against a determination of the Deputy Pensions Ombudsman. His first complaint, concerning the treatment of sickness absence as pensionable service, had been upheld and was not appealed. His second complaint alleged that the trustee and Woolworths had failed properly to consider him for an ill-health early-retirement pension.

Mr Hughes had been absent through ill health for several years. Before the company entered administration, discussions and medical assessments took place, but he did not complete the relevant application form or provide sufficient medical evidence to the trustee. His employment subsequently ended through redundancy arising from the company’s administration. The central issues were whether he had retired due to incapacity, whether delay constituted maladministration, and whether the Pension Protection Fund legislation preserved any entitlement.

1. Appeal dismissed. The appeal lay only on a point of law under section 151(4) of the Pension Schemes Act 1993. The Deputy Pensions Ombudsman had correctly addressed the complaint and was entitled to reach her factual conclusions.
2. Under Rule 10, the trustee’s formal decision arises after the member has retired. No formal application is required by the rule. Nevertheless, the member must provide sufficient information for the trustee to determine whether the retirement was due to incapacity. The trustee may give a provisional view before retirement, but such a view becomes operative only if the member subsequently retires.
3. Mr Hughes had not retired. His employment ended by redundancy when the company’s business could not be sold. The redundancy was unrelated to his health and was one of a wider group of redundancies. Rule 10 therefore did not apply. Harris v Lord Shuttleworth [1994] PLR 47, where dismissal caused by incapacity was treated as retirement, was distinguishable.
4. The trustee was not guilty of maladministration in failing to progress an ill-health pension claim. Mr Hughes had not completed the supplied form, had not formally requested a provisional decision, and had not provided sufficient medical evidence. His concern that an ill-health application would affect the separate Rule 24 dispute was not caused by any maladministration or misrepresentation by the trustee or company.
5. The Ombudsman’s jurisdiction to remedy maladministration did not extend to compensating for the lost opportunity to obtain an ill-health pension where that loss was not sustained in consequence of the relevant maladministration. The court relied on Re the matter of the CCA Stationery Ltd Pension and Assurance Scheme [2003] EWHC 2989 (Ch) at [75]–[80].
6. Section 138 of the Pensions Act 2004 restricted benefits during the assessment period by reference to the compensation payable under Schedule 7. An ill-health pension awarded after the assessment date would not increase the protected amount unless the relevant rules made it payable, including by backdating, before that date. Rule 13(2) could not assist Mr Hughes: it required an election after he became a deferred member, and no such request had been made.

• High Court (Chancery Division): appeal from the Deputy Pensions Ombudsman dismissed.