Baugniet v Capita Employee Benefits Ltd (t/a Teachers' Pensions) & Anor

The Pensions Ombudsman must distinguish between maladministration that causes non-financial injustice and maladministration, negligence or a dispute of fact or law that may cause financial loss. A complainant’s delay does not automatically extinguish an administrator’s causative responsibility. The relevant question is whether, on the evidence, the loss would probably have been avoided but for the administrator’s error. An estimated pension-transfer credit, expressly subject to market conditions and delay, does not create an entitlement to the estimated figure or a right to informed consent before later actuarial factors are applied. Compensation for non-financial injustice must remain proportionate, but the historic £1,000 upper limit should be rebased at £1,600.

The appellant transferred a personal pension into the Teachers Pension Scheme. The administrator initially miscalculated the estimated service credit, later received the transfer value after an actuarial-factor embargo, and ultimately awarded a substantially lower credit. The Pensions Ombudsman found maladministration and awarded £750 for distress and inconvenience, but rejected financial compensation and the appellant’s arguments based on informed consent, legitimate expectation, human rights and the governing Regulations.

The appeal concerned whether the Ombudsman had properly addressed causation and potential financial loss, and whether the transfer estimate gave rise to a legal right to the quoted credit or to reject the transfer when revised factors were applied.

1. Appeal partly allowed and remitted. The Ombudsman’s determination was upheld on informed consent, legitimate expectation, article 1 of the First Protocol and the Regulations. The matter was remitted for reconsideration of financial loss, negligence and the appropriate remedy, and for reconsideration of compensation for maladministration.
2. The Ombudsman had to distinguish maladministration not infringing a legal right from maladministration infringing a legal right or a dispute of fact or law under [1993] PSA. The same conduct may engage both categories, and each must be investigated separately.
3. The adjudicator and Ombudsman erred in treating the appellant’s failure to act immediately as negating the administrator’s delay. The correct inquiry was whether the administrator’s error fell below the standard reasonably expected of a pensions administrator and whether, more likely than not, the transfer would have secured the higher credit before the embargo.
4. The evidence made it highly probable that, but for the administrator’s delay, the appellant would have obtained the estimated credit before the embargo. A financial remedy, potentially calculated actuarially as the cost of securing additional service credit, was therefore capable of being fashioned.
5. The estimated credit did not create a legitimate expectation or a right to informed consent to the final credit. The warning that the estimate could be affected by delay, together with the statutory scheme and prevailing actuarial factors, defeated the claim to an assured entitlement.
6. The Ombudsman was directed to reconsider the wider maladministration, including repeated calculation errors, lack of candour, inadequate dispute-resolution review and the continuing distress caused by the incorrect post-embargo calculation. The judge considered £1,000 outdated and urged rebasing the ordinary upper limit at £1,600.

• High Court (Chancery Division): appeal from the Pensions Ombudsman’s determination dated 9 March 2016. Appeal allowed in part and remitted for reconsideration.