The Pensions Ombudsman responds to the Court of Appeal’s decision in CMG that it is not a ‘competent court’.

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Recap: the CMG decision
In November we reported on the decision of the Court of Appeal in the CMG case, where it was held that the Pensions Ombudsman (“TPO”) is not a “competent court” for the purposes of s91(6) of the Pensions Act 1995.
The effect of the decision is that a determination of TPO alone is not sufficient to allow trustees to recoup overpayments of pension where there is a dispute. In order to enforce such a TPO determination, Trustees will need to apply to the County Court for an order.
At the time, TPO issued a statement confirming it was reviewing its position and would provide an update shortly.
TPO response - recoupment factsheet
That promised update was published just before Christmas in the form of a statement, together with a 3 page factsheet.
The statement emphasised that TPO was disappointed with the decision, and that the effect of the ruling is to provide an additional hurdle for schemes seeking to recoup overpayments. It is noted that the DWP “is supporting legislative changes to formally empower TPO to bring an outstanding overpayment dispute to an end without the need for a County Court order”.
Pending any such legislative change, the factsheet provides guidance on how TPO will approach disputed overpayment cases. Key takeaways include:
What does this mean in practice? - the Mr Y v AECOM Pension Trustee Ltd determination
At the same time the factsheet was published, the PO also published its first determination in an overpayments case following the Court of Appeal’s decision in CMG.
The determination includes a detailed discussion of the various defences by which a member could seek to avoid the recovery of the overpaid pension. On the basis of the particular circumstances of this member, the PO found no successful argument / defence.
However, Mr Y’s complaint was partially upheld due to the Trustee’s action in beginning recovery of the overpayment without a court order. On this subject of recouping overpayments, the determination makes the following key points:
Conclusions
Together with the Mr Y v AECOM determination, the factsheet published by TPO provides welcome clarification on how trustees should approach the recovery of overpaid pensions in the event there is a dispute with the member.
Of course, the starting point is always that trustees should administer the scheme in accordance with its rules, and that where a payment has been made in error trustees are able to seek to recover it. However, members may have a defence to such recovery (e.g. change of position).
It is now clear that post CMG, if the recovery is disputed by the member, the Trustees will be acting unlawfully if they commence recoupment without an order from the county court – this is likely to be considered maladministration as well as a breach of trust. Pending any legislative change, this means it will take longer before the money is back in the scheme since post a TPO determination, the trustees will need to go through the additional administrative step of obtaining a county court order authorising the recoupment to begin.
If you need any assistance with an overpayments case or a member dispute, please do get in touch with me or your usual Pensions team contact.
“…I would observe that (post CMG) generally the deduction of overpayments by recouping them from future pension payments where the amount or period of recovery is disputed is likely to amount to breach of law and maladministration (in the absence of an order of a competent court”
https://www.pensions-ombudsman.org.uk/sites/default/files/decisions/CAS-39869-Q8J7.pdf