Ballylumford Power Pension Scheme · CAS-29744-V6F8

CAS-29744-V6F8

Ombudsman’s Determination Applicant Mr N

Scheme Ballylumford Power Pension Scheme (the Scheme)

Respondents Trustees of the Ballylumford Power Pension Scheme (the Trustees) Prudential

Outcome

Complaint summary

Background information, including submissions from the parties

“Increases To Benefits In Deferment

Both your pension and your spouse’s pension will be increased in April each year by an uncapped RPI.

Increases To Benefits In Payment

Both your pension and your spouse’s pension will be increased in April each year by an uncapped RPI. 1 CAS-29744-V6F8 …

Deferred Scheme Benefits

Your deferred pension and lump sum are extremely valuable benefits, which will be increased annually, normally in line with rises in the cost of living from the date of leaving until you receive the benefit.”

“Pension Increases

The pension and lump sum at date of leaving will be increased annually in line with inflation during the whole period of deferment, unless Premier Power Limited resolves that any increase in excess of 10% shall not apply. When the Pension comes into payment it continues to be increased annually.”

“27. Deferred Pension increases 2 CAS-29744-V6F8 The amount of each pension and of each lump sum payable to or in respect of a Contributor who leaves Pensionable Service with an entitlement to a deferred pension under the Rules shall be increased on 1 April (or such other date as the Trustees may decide) in the year following the date in which his Pensionable Service ends and in each subsequent year until it becomes payable by an amount equal to the percentage increase in the RPI Index (as defined in Rule 26.6) over the period of 12 months ending at the end of the preceding September (or such other period as the Trustees may decide).

Provided that

27.1 if at the effective date of any increase under this Rule a pension has not been in deferment for twelve months, the increase will be a proportion of the percentage increase referred to in this Rule.”

Adjudicator’s Opinion

• The Scheme Rules take precedence over any potentially incorrect information provided by other sources and Rule 27 was administered correctly. Whilst in deferment, increases are to be applied on 1 April each year until the pension goes into payment. On being put into payment, the rules relating to deferred pensions, such as Rule 27, no longer apply.

• Under Rule 27, a pro rata increase applied in the first year of deferment, but not in the final year of deferment.

• Whilst Mr N might be dissatisfied with the effect of Rule 27, it does not mean the Rule is ineffective.

• Mr N relied upon the deferred benefit statement received following his redundancy, which said:

“The pension and lump sum at date of leaving will be increased annually in line with inflation during the whole period of deferment…”

• Although one could understand why Mr N took the stance he did, the information provided was correct. The timing of the increase was “annually”, meaning a single increase per year “during the whole period of deferment.” The information could have been more specific, but it was technically correct, and the misunderstanding is not an administrative error.

• While Mr N may have waited before taking benefits if he had been informed that the increase would only be applied in April 2018, he had in the meantime received the pension and lump sum for the intervening months. But in any event, 3 CAS-29744-V6F8 Prudential was not required to provide retirement quotes for alternative dates without Mr N requesting them, and there was no requirement for it to have made him aware that the increase would only be applied if he deferred until after April 2018.

Mr N did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Mr N provided his further comments which do not change the outcome. I agree with the Adjudicator’s Opinion and I will therefore only respond to the key points made by Mr N for completeness.

Ombudsman’s decision

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I do not uphold Mr N’s complaint.

Anthony Arter

Pensions Ombudsman 8 January 2020

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