The Pensions Ombudsman v CMG Pension Trustees Limited & Anor

Where pension-benefit recoupment is disputed, section 91(6) of the Pensions Act 1995 requires the relevant monetary obligation to have become enforceable under an order of a competent court before set-off is exercised. The Pensions Ombudsman is not such a court. His determination or direction may, however, resolve the dispute and is enforceable administratively in the County Court under the Pension Schemes Act 1993.

The County Court does not reconsider the merits or require a fresh claim, declaration or payment order. It enforces the Ombudsman’s binding determination or direction as if it were its own order.

The trustee of the CMG UK Pension Scheme brought a Part 8 claim concerning the Scheme rules. Leech J’s construction led to overpayments of benefits and raised questions about recoupment from future pension payments.

At first instance, the judge held that section 91(6) of the Pensions Act 1995 required an order of a competent court where the amount or rate of recoupment was disputed; that a declaration was sufficient; and that the Pensions Ombudsman was not a competent court: [2022] EWHC 2130 (Ch).

The Pensions Ombudsman appealed only the last conclusion. The Court of Appeal also considered the consequences of an Ombudsman determination for enforcement under the Pension Schemes Act 1993.

1. Appeal dismissed. The Pensions Ombudsman is not a “competent court” for section 91(6) of the Pensions Act 1995. His jurisdiction to determine disputes is available only on a reference by or for a member or beneficiary. That one-sided jurisdiction differs materially from a court’s jurisdiction.

2. The statutory scheme also distinguishes the Ombudsman from the County Court. Section 150 of the Pension Schemes Act 1993 gives the Ombudsman specified powers of the court for an investigation, while defining “the court” as the County Court. His informal and inquisitorial maladministration functions further supported that conclusion.

3. Where a dispute exists about recoupment, section 91(6) remains engaged after the Ombudsman has resolved it. The words “has become enforceable under an order of a competent court” require enforceability under a court order; a determination which is merely capable of later enforcement does not itself satisfy the condition.

4. For section 91(5)(f), an erroneous pension payment gives rise to the monetary obligation owed to the scheme. It may be rectified by equitable recoupment from future benefits rather than a payment by the member.

5. The Ombudsman may determine the existence and extent of an overpayment and direct recoupment at a specified rate. Such decisions are final and binding, subject to appeal on a point of law. The County Court cannot revisit the merits. Under section 151(5), it enforces the determination or direction administratively, without a fresh action, judicial adjudication, declaration or payment order.

6. The Court approved the conclusion in Burgess v BIC UK Ltd [2018] EWHC 785 (Ch) that the Ombudsman is not a competent court, but respectfully disagreed with the suggestion that the County Court must make a declaration of the trustees’ entitlement.

• Court of Appeal (Civil Division): dismissed the Pensions Ombudsman’s appeal and confirmed that he is not a competent court for section 91(6) of the Pensions Act 1995: [2023] EWCA Civ 1258.
• High Court, Chancery Division: Leech J determined the Scheme questions and held, among other matters, that the Pensions Ombudsman was not a competent court: [2022] EWHC 2130 (Ch).