Determining the reach of the Pensions Ombudsman – who decides?

12 July 2012

The Pensions Ombudsman has power to investigate and determine complaints of maladministration in connection with occupational and personal pension schemes. The power can be exercised in relation to complaints against the trustees or managers of a scheme but also in relation to complaints against a person “concerned with the… administration of the scheme”. In R oao Government Actuaries Department v Pensions Ombudsman [2012] EWHC 1796 (Admin) the court considered a challenge by the Government Actuaries Department (GAD) to a decision by the Pensions Ombudsman that GAD was concerned with the administration of the Firefighters’ Pension Scheme.

GAD’s principal function under the Scheme was to prepare tables that the Scheme managers used to calculate various actuarial values. That function included an obligation to consider, periodically, whether the tables it produced needed revision and if so to revise the tables. The Pensions Ombudsman determined that this meant that GAD was itself involved in the administration of the Scheme. The first issue considered by Mr Justice Ouseley was in relation to the role of the court when considering the challenge to that decision. The Pensions Ombudsman contended that provided that it had applied the correct legal approach, the court’s role was limited to assessing whether it had reached a reasonable decision. GAD argued that the court had to decide for itself whether GAD was concerned with the administration of the Scheme. It was held that GAD was correct.

In reaching that conclusion what was most important was that the issue of whether or not GAD was concerned with the administration of the Scheme went to the jurisdiction of the Pensions Ombudsman to consider the complaint of maladministration at all – and Mr Justice Ouseley was concerned about the risks that would be created if a statutory body such as an Ombudsman asserted a jurisdiction and then effectively had power to determine that jurisdiction for itself. This contrasts with the approach of the courts in judicial reviews of substantive decisions by an Ombudsman, where very considerable respect or deference is given to the Ombudsman’s particular expertise and consequently the courts are very slow to interfere (see for example our blog “Challenging a decision of the Financial Ombudsman Service”).

Mr Justice Ouseley went on to hold that the Pensions Ombudsman did have jurisdiction to consider the complaint against GAD. The argument here was whether what GAD did was no more than acts of administration in connection with the Scheme (as had been held in earlier cases to be the position of solicitors acting for trustees of a scheme when seeking to recover funds for the trustees and the position of an insurance company providing a unit linked policy to trustees) or whether it went beyond that so as to amount to acts concerned with the administration of the Scheme. In reaching his conclusion that GAD reached the “concerned with” threshold, the judge placed particular emphasis on the fact that GAD had a continuing duty, imposed as part of the structure of the Scheme and necessary for the proper operation of the Scheme, to consider revising the tables it produced for the Scheme managers.

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