How to Fix UK Pension Scheme Errors

In the U.K., a member of a pension scheme was unwell and wanted to make sure his partner would receive his pension benefits when he died. The couple sought out information from the scheme, which told them that the woman would be able to receive the pension even if they weren’t married at the time of his death. They didn’t marry, and the pension member passed away.

However, the information they received from the scheme was wrong, and the man’s partner was not entitled to his survivor’s pension. Because they would have gotten married had they received the correct pension information, the man’s partner brought a case to the pension ombudsman, asserting that there was an unambiguous representation that they didn’t need to get married, which they then accepted in good faith, and therefore she was entitled to the pension.

She satisfied the ombudsman that she would have gotten married if they’d been given the correct information, and the ombudsman ordered her to receive the pension, said Suzanne Padmore, a partner at Burges Salmon in Bristol, U.K.

How Pension Errors Happen

There are many ways incorrect pension information can come about, from small mistakes to larger long-term errors. Sometimes, incorrect information comes from basic employee member data being wrong, which is the simplest to correct by either contacting an employer or logging into the pension scheme website. More complicated errors come when an employer has made a mistake regarding what pension contributions are payable, perhaps basing the calculations on the wrong salary. 

“If that’s happened, that might be a bit more serious for the employer, because it may mean that the employer is in breach of their statutory U.K. pensions’ auto enrollment duties, and if that’s the case, then the employer has to correct that type of data quickly,” said Penny Cogher, a partner at Irwin Mitchell in London. “Otherwise, our U.K. pensions regulator that regulates workplace pensions could get involved.”

Who Is Responsible for Fixing an Error?

If the employer has made an error, particularly with issues such as overpayment of pension benefits, they can try to reach an agreement with the member for repayment plans or other necessary methods to correct the mistake. If the employee and the employer can’t reach a solution, there are methods to resolve the issue. 

“Every pension scheme has to have an internal dispute resolution procedure, … and that’s a free process for an employee to use,” Cogher said. “If the member is not happy with the decision reached at the end of that internal dispute resolution process, then the member—the employee—can go to the pension ombudsman, and again, this is a free service for the employees and the members.”

The ombudsman has wide powers, and the employers must abide by their decisions, though the scheme can’t demand that employees pay back overpaid pensions. The entire process can take many years.

“It actually places the member in quite a good position because there’s scope there for the trustees just to compromise with the individual,” Cogher said. 

Complications can arise when members have used their pension fees to pay off debts, put down a deposit on a house, or perform other activities that make the money no longer accessible. The trustees of the pension scheme need to take all of this into account when considering the best next steps.

“If the member has changed its position by spending the money on something specific, then it’s obviously more difficult for the trustee to recover that value, and then the trustees need to take a very sensible, almost like a pragmatic, approach to the likelihood of recovery,” Padmore said. “Depending on the facts, that can reach a view in some cases that no recovery would be feasible.”

What Can Employees Do?

If an employee can prove that they were given incorrect pension information that led them to make a decision they would not have made with the correct information, they will have a strong case when they go to the ombudsman.

Employees should stay on top of information about their own pension in order to help catch any errors early. One way to do this is to simply log in to the pension’s online portal to keep track of monthly pension contributions and other information.

“The members are entitled to basic scheme information as a right, and the ombudsman does expect people to read that information,” Cogher said. There is also an organization called Money Helper that can help walk people through their pension information.

“There is a concern that members—individuals—don’t engage with their pension as much as they ought to, taking into account that it’s such a significant asset and benefit for them,” Padmore said. “Pensions are often not on the top of the list, and they really should be,” she said. 

Katie Nadworny is a freelance writer in Istanbul.