NHS Business Services Authority v Leeks & Ors

A Pensions Ombudsman may find maladministration where a pension scheme administrator’s automated systems cannot provide accurate and important information to members. The administrator’s special expertise and responsibility may justify an expectation that it will identify when a member’s pension entitlement is complete and contributions should cease. The Ombudsman may award compensation for injustice caused by maladministration, including loss resulting from a missed opportunity to retire and subsequently return to employment. Causation is assessed on the evidence and the balance of probabilities; later conduct does not necessarily establish how the member would have acted earlier in materially different circumstances. Where two bodies contributed to the loss, an appeal by one body should not reduce the complainant’s recovery merely to facilitate contribution between the responsible bodies.

The Authority, administrator of the NHS Pension Scheme, appealed against a decision of the Pensions Ombudsman dated 12 August 2013. The Ombudsman had found maladministration by both the Authority and the employing NHS Trust after pension contributions continued beyond the point at which Mrs Leeks had achieved maximum pensionable service and reached age 60 without being told that she could take her pension.

He directed the Authority to pay about £110,000 compensation for pension payments lost from January 2007 until the date of his determination. The appeal challenged the findings of maladministration, causation, compensation beyond March 2009, and the decision to place liability on the Authority alone.

Appeal dismissed.

1. The expression maladministration in sections 145 to 152 of the Pension Schemes Act 1993 is broad enough to include unreasonable limitations inherent in automated systems operated by a pension scheme administrator. The Authority’s expertise, access to detailed service information and responsibility to provide accurate information meant that it should have told the member when her entitlement was complete and further contributions were not due. The Ombudsman was not required to make more elaborate findings identifying in detail how the systems should be rectified.
2. The Ombudsman was entitled to find that the failure to provide proper information caused injustice and loss. On the evidence, the member would probably have retired in January 2007 and then returned to work. Her decision not to retire when given correct information in March 2009 was not inconsistent with that conclusion because the circumstances were materially different, including her lack of confidence that compensation would be paid.
3. The Ombudsman was entitled to assess causation and loss on the balance of probabilities. The principle that the law should not speculate when it knows did not require a different result, since the evidence did not establish with certainty how the member would have acted in January 2007.
4. The complaint, fairly read, included continuing loss after March 2009. The Ombudsman therefore had jurisdiction to compensate for that period, and was entitled to find that the maladministration continued to have a causative effect until his determination.
5. Although both the Authority and the Employer were found responsible for maladministration, the Authority could not reduce the compensation payable to the complainant merely to obtain a contribution from the Employer. The Ombudsman’s reasons for placing the compensation on the scheme administrator disclosed no error of law.

The Ombudsman’s determination was upheld.

The Authority appealed to the High Court from the Pensions Ombudsman’s determination dated 12 August 2013. The appeal was dismissed.