Case Law
Pensions Ombudsman not "competent court" - Pensions Ombudsman v CMG Pension Trustees Ltd and another [2023] EWCA Civ 1258
We reported in our August Pensions Insights 2022 that the High Court had determined that payments made to members to remedy underpayments of benefits were subject to a six-year limitation period under the Scheme's forfeiture rule.
In the case before the High Court it was also held that the Pensions Ombudsman ("TPO") was not a "competent court" for the purposes of section 91(6) Pensions Act 1995 which deals with set-off against pension benefits (and it being accepted that an equitable right of recoupment of overpaid benefits would fall within its terms). TPO appealed that aspect of the case.
Dismissing the appeal, the Court of Appeal agreed with the decision and reasoning of the High Court including that:
- TPO only has jurisdiction to investigate a dispute of fact or law if it is referred to TPO by/on behalf of a potential or actual beneficiary and not at the behest of a trustee;
- It seemed unlikely that Parliament would have extended the power of enforcement in section 91(6) to TPO if the trustee itself had no right to apply for enforcement;
- The Pension Schemes Act 1993 provides that a determination of TPO is enforceable “in the county court as if it were a judgment or order of that court” meaning that TPO has no direct powers of enforcement and any determination or direction and any application for committal for breach of a determination or direction or for other enforcement remedies, must be brought in the County Court; and
- The drafter of section 91(6) would have had the distinction between the judicial functions of the court and the wider powers of investigation of TPO, as well as the different enforcement regimes in mind, and if Parliament had intended to extend section 91(6) to a determination by TPO, the sub-section might have been expected to make express provision to that effect.
At the time of writing TPO has added a statement to its website confirming that it has seen the Court of Appeal judgment, is currently reviewing its position, and will provide an update shortly.
New Law
Autumn Statement Pensions Measures
A number of measures stated to represent the next steps of the Chancellor’s Mansion House reforms and meet the three golden rules: to secure the best possible outcomes for pension savers; to prioritise a strong and diversified gilt market; and to strengthen the UK’s competitive position as a leading financial centre pensions, were in the recent Autumn Statement including:
- The FCA will consult next spring on the next steps of the new Value for Money Framework. As part of this, schemes will be required to compare themselves against others in the market, including large scale schemes, to ensure they are delivering value for their members.
- The government will tackle the long-standing problem of “small pot” pensions and is launching a call for evidence on a lifetime provider model which would allow individuals to have contributions paid into their existing pension scheme when they change employer.
- To increase opportunities for defined benefit schemes to invest in productive finance while fully protecting member benefits, the government will consult this winter on how the Pension Protection Fund can act as a consolidator for schemes unattractive to commercial providers and whether changes to rules around when surpluses can be repaid could incentivise investment by well-funded schemes in assets with higher returns. The authorised surplus repayment charge will be reduced from 35% to 25% from 6 April 2024. See further detail on this change on our website here.
- Following consultation, the government confirms that guidance for the Local Government Pension Scheme (LGPS) in England and Wales will be revised to implement a 10% allocation ambition for investments in private equity, which is estimated to unlock around £30 billion. The government is also establishing a March 2025 deadline for the accelerated consolidation of LGPS assets into pools and setting a direction towards fewer pools exceeding £50 billion of assets under management.
- The government will commit £250 million to two successful bidders in the Long-term Investment for Technology and Science (LIFTS) initiative, subject to final agreement. This will create new investment vehicles tailored to the needs of pension funds, generating over a billion pounds of investment from pension funds and other sources into UK science and technology companies.
- The government confirmed its intention to establish a Growth Fund within the British Business Bank (BBB). The Growth Fund will draw upon the BBB’s expertise and a permanent capital base of over £7 billion to give pension funds access to investment opportunities in the UK’s most promising businesses. A new Venture Capital Fellowship will help produce the next generation of world-leading investors in the UK’s renowned venture capital funds to support investment into the UK’s most innovative high-growth companies.
- Alongside measures on pensions investment, the government is legislating to give effect to the Solvency II reforms to deliver a more tailored, clearer and simpler regulatory regime for the insurance sector. The reforms will boost economic growth by incentivising private investment for productive assets, such as infrastructure.
News
TPR - Delivering investment returns for pension savers
TPR's Chief Executive Nausicaa Delfas, gave a speech to the Mansion House Pensions Summit on why a focus on investment and value is worth pursuing.
Key points of this included that:
- Trustees have a duty to act in savers’ best interests. This means working hard to deliver the retirement income that savers expect, including properly considering the full range of investment options.
- TPR will not be telling schemes how to invest – that is a decision for trustees which involves a balance of risk and reward.
- TPR is evolving its regulatory approach to help shape the market towards fewer, larger, well-run schemes capable of investing in a diverse range of assets.
- Where schemes do not have the scale, expertise, or appetite to truly deliver for savers, it is time to consolidate and move their savers into a scheme that can. Savers deserve nothing less.
Other Articles
Key pensions considerations for Venture Capital (VC) investors on legal due diligence of investee companies
- Read on our article here
Pensions tax in the Autumn Statement
- Read on our article here
