In this article we look at a pension scheme trustee's duty to keep scheme records.


In his determination regarding Dr S (PO-10463) the Ombudsman held that the Trustees had not failed in their duty under scheme rules “to keep or cause to be kept a complete record of all matters essential for the working of the Scheme” where they were unable to produce a calculation showing how they had arrived at incorrectly quoted pension figure quoted to member almost 30 years earlier.

On becoming a deferred member in 1984, Dr S had been quoted a deferred pension of £4758 pa, payable from age 65. However, on retiring at age 65, the pension which the member actually received was £3335 pa. It transpired that the difference was due to increases in the member's GMP having been offset against the balance of his pension. (This practice was subsequently prohibited by "anti-franking" legislation, but the practice was lawful in respect of members who left service at the date Dr S did). Dr S argued that the quotation on the part of the administrator could have reflected a deliberate decision to backdate the application of anti-franking legislation that was introduced shortly afterwards. He asserted, 'Taking into account that the uncertainty has arisen because of the Trustees’ failing in their duty under the Trust Deed, to “keep or cause to be kept a complete record of all matters essential for the working of the Scheme”, I believe that the original offer should stand.'

The Ombudsman concluded that there was no evidence that the higher pension quoted to Dr S in 1984 was the result of a decision to augment his benefits by applying anti-franking provisions where this was not required by law. An augmentation would not normally be silently awarded. Had there been an augmentation, the Ombudsman would have expected Dr S's leaver's statement to clearly show this. The Ombudsman did not agree that the Trustees had failed in their record-keeping duty under the scheme rules. The requirement “to keep or cause to be kept a complete record of all matters essential for the working of the Scheme”, did not necessarily mean every piece of correspondence issued and calculation performed. It simply meant the information required to run the Scheme. This could consist of a record of members’ entitlement and the relevant trust deed and rules. However, the Ombudsman did make an award of £500 for the distress and inconvenience caused by the quotation.

Comment

The Ombudsman's determination that trustees are not necessarily required to keep every calculation and piece of correspondence is likely to be welcome news for trustees. However, the fact that this determination relates to events over 30 years ago does illustrate the potential for matters relating to the operation of a pension scheme to come under scrutiny many years after the original event.

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Rachel Rawnsley

Rachel Rawnsley

Partner, Head of Pensions
United Kingdom

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Jade Murray

Jade Murray

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United Kingdom

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Catherine McAllister

Catherine McAllister

Partner, Pensions
United Kingdom

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Rachel Uttley

Rachel Uttley

Partner, Pensions
United Kingdom

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