TPO is not a ‘competent court’ – what does it mean?
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The Court of Appeal has ruled that the Pensions Ombudsman is not a “competent court”, in line with a judgment from last year. What are the implications for trustees?
The question of whether TPO is a 'competent court' arose in last year’s CMG Pensions Trustees Limited v CGI IT UK Limited, an overpayment case which among others discussed if trustees can rely on a determination of the Pensions Ombudsman to recoup a disputed overpayment or if they need a court order to do so.
Earlier this month, Lady Justice Asplin, together with two other judges, agreed with the original ruling that the Pensions Ombudsman is not a competent court in this case.
She said the Pensions Ombudsman can make determinations and directions in relation to an overpayment and recoupment of benefits, but this needs to be enforced through the County Court. However, she described the latter as “an administrative matter” to be carried out by a court officer, without any need to revisit the merits of the case.
In reaction to the dismissal of its appeal, TPO stated: “The Pensions Ombudsman has seen the Court of Appeal judgment in relation to the ‘competent court’ point and is currently reviewing its position. TPO will provide an update shortly.”
What do trustees need to do?
Victoria Thompson-Hill, a professional support lawyer at Baker McKenzie, said the ruling means that any determination by the ombudsman permitting a deduction from future pensions after an overpayment dispute brought by a member must be approved by the County Court.
“The requirement for trustees to seek approval from the County Court where there has been a dispute is an additional step for trustees. That said, the role of the County Court was described in the case as being purely ‘administrative' in this context, and it was also confirmed that the County Court could not revisit the 'substance' of the relevant dispute,” she explained.
Although the judgment has clarified that trustees need more than just a successful Pensions Ombudsman determination to deduct pensions from a member, some uncertainty remains, she added.
“The most significant is likely to be what actually constitutes a ‘dispute’ under the statutory definition, and how widely the term should be construed,” she said.
“It’s also not clear what a cautious trustee should do if there is, say, an informal dispute as to a recoupment exercise that doesn’t, for whatever reason, reach the Ombudsman; could a trustee go separately to the County Court for an enforcement order as trustees are not permitted to unilaterally bring complaints to the Ombudsman?”
Thompson-Hill said she is not hopeful these questions will be clarified anytime soon. However, she expects more pension rectification exercises over the coming years, which “could well draw out potential previous overpayments, meaning that this area could become more of a live issue for trustees”.
Obtaining an order should be simple
Trustees favour deducing repayments from pension cheques because it can “in principle be exercised without the need for litigation”, said Amy Difford, a senior associate at law firm Sackers. “The judgment therefore adds a layer of complexity to that process.”
However, as the County Court will not need to re-hear the case, the process of obtaining an order should be a relatively simple administrative task, she added.
“The judgment therefore provides trustees with a clear and straightforward route to get an enforceable court order in disputed cases. We expect this aspect of the decision will be welcomed by trustees, particularly given the uncertainty of the law in this area over the last few years,” said Difford.
A court order will remain the exception, she believes, reminding trustees that in the majority of cases, members do not dispute overpayments.
Will the ruling make it more onerous for trustees to recover pension overpayments?
