Teachers Pension Scheme · CAS-44368-C3K1

CAS-44368-C3K1

Ombudsman’s Determination Applicant Mr N

Scheme Teachers' Pension Scheme (the Scheme)

Respondent Teachers' Pensions (TP)

Complaint Summary

Summary of the Ombudsman’s Determination and reasons

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Detailed Determination

Material facts

On 15 April 1996, Mr N stopped employment and received Premature Retirement (PR) benefits from TP, which included a pension at an initial rate of £4,489.85 per year.

Please let me know immediately if your starting salary has changed (e.g. due to a salary increase). A change in your salary of reference and/or starting salary will require the above assessment to be recalculated.

Your pension, if it is reduced or suspended, will be restored to its original rate when your full-time re-employment ends. When you cease full-time employment you should compete the enclosed Form TP99A. Our Benefits section will re-assess the amount of pension payable and advise you direct. 2 CAS-44368-C3K1 …

Under the new regulations, which are effective from 1 April 1997, if you accept a new full-time re-employment contract after this date, you will no longer be allowed to contribute to the teacher’s [sic] superannuation scheme. The assessment of re-employment against your pension remains unchanged and if you are re-employed on a full-time basis, then your pension may be affected.

If you would like more details of the effect of re-employment on teachers [sic] pensions, please ask for Leaflet 192.”

On 29 April 1999, TP wrote to Mr N as follows:

“Thank you for the completed Certificate of Re-Employment. I apologise that we have not responded sooner.

The new abatement arrangements were introduced with the intention of providing maximum flexibility for retired teachers wishing to undertake re- employment. The way in which the former arrangements worked resulted in unfair treatment of those who undertook short spells of full-time re- employment compared with those who worked on regular part-time contracts.

However, it was never the intention that the new abatement provisions should disadvantage teachers who had already entered into a teaching commitment. It has been agreed that those re-employed teachers who were in post on 31 August 1998, the day before the new arrangements became effective, should continue to be treated as if the new regulations had not come into operation for as long as they remain in the same post and subject to the same contract. Teachers’ pensions will therefore continue to assess your pension under the former arrangement until your current employment terminates.

If your circumstances change during the tax year i.e. 6 April 99 to 5 April 2000, please contact Pensioner Services immediately at the above address. Failure to do so may result in the unnecessary suspension of your annual pension which you may have to repay promptly.”

“I understand that in the event of a change in my pension entitlement any overpayment of pension would have to be refunded.”

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4 CAS-44368-C3K1 “I am writing to inform you that, unfortunately, an overpayment of your retirement benefits amounting to £22,097.691 net has occurred. When you applied for your benefits based on a 1l [sic] your service payable from 17 September 2005, your premature pension benefits should have ceased. Unfortunately, this did not happen therefore your pension has been overpaid. Teachers’ Pensions are obliged to recover all overpayments incorrectly paid from public funds for whatever the reason the overpayment occurred and as such I must ask you to repay the amount of £22,097.69.”

On 21 August 2019, TP sent Mr N a response under stage one of the Internal Dispute Resolution Procedure (IDRP), which said in summary:-

1 The figure is inconsistent with the later figures provided.

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In response, Mr N raised further complaint points in August 2019, that said in summary:-

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On 19 December 2019, the Department of Education (DoE) sent Mr N a stage two IDRP response that said in summary:-

Summary of TP’s position

TP submitted:-

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Summary of Mr N’s position

Mr N submitted:-

Conclusions

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2 The 1997 Regulations were revoked by the 2010 Regulations but there are saving provisions in Schedule

13 to the 2010 Regulations. 10 CAS-44368-C3K1

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“Public sector organisations may waive recovery of overpayments where it is demonstrated that recovery would cause hardship. But hardship should not be confused with inconvenience. Where the recipient has no entitlement, repayment does not in itself amount to hardship, especially if the overpayment was discovered quickly. Acceptable pleas of hardship should be supported by reasonable evidence that the recovery action proposed by the paying organisation would be detrimental to the welfare of the debtor or the debtor's family. Hardship is not necessarily limited to financial hardship; public sector organisations may waive recovery of overpayments where recovery would be detrimental to the mental welfare of the debtor or the debtor's family. Again, such hardship must be demonstrated by evidence.”

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“114 Cessation, etc of benefits where no entitlement

17 CAS-44368-C3K1 1) This regulation applies where after paying a benefit the Secretary of State determines that there was no entitlement to the benefit or there is no longer an entitlement to the benefit.

2) The Secretary of State may-

(a) cease to pay the benefit;

(b) withhold the whole or any part of the benefit;

(c) in the case of a payment made when there was no entitlement to the benefit, recover any such payment.”

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I consider in the circumstances, that Mr N shall repay the sum of £9,595.77 to TP upfront and, subject to section 91(6) of the Pensions Act 1995 (the 1995 Act), the remaining £12,621.12 of the overpayments which pre-dated 1 May 2014 over a period of 14 years 8 months by way of set-off against his future pension payments for example a deduction of £73.69 a calendar month. 19 CAS-44368-C3K1

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In the circumstances, I consider that an award of £1,000 was appropriate for the distress and inconvenience caused given the length of time it took TP to identify the mistake and the level of distress this caused. Additionally, I consider a further award of £500 is appropriate for the content and tone of the early correspondence with Mr N, notably the lack of empathy and lack of apology for the original mistake at the time Mr N was first notified of the overpayment, the failure to properly follow the Treasury Guidelines and properly explore the available defences to recovery early enough in the process.

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accrued six years prior to the date of Teachers’ Pensions’ (TP’s) formal response dated 1 May 2020, as of 30 April 2014 amounts to £15,868.19 gross with tax of £3,247.07 leaving a net balance of £12,621.12.

The overpayment Mr Norton accrued from the date of TP’s formal response dated 1 May 2020, amounts to £11,845.48 gross with tax of £2,249.71 leaving a net balance of £9,595.77.

tax year Gross overpayment

2005/06 £164.10

2006/07 £1,736.91

2007/08 £1,798.44

2008/09 £1,868.58

2009/10 £1,952.47

2010/11 £1,956.84

2011/12 £2,012.71

2012/13 £2,114.81

2013/14 £2,165.86

To £97.47 30/04/2014

From £2,126.27 01/05/2014

2015/16 £2,252.71

2016/17 £2,254.43

2017/18 £2,275.29

2018/19 £2,340.32

2019/20 £596.46

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1. Annex 4.11, ‘Overpayments’, says: “In principle public sector organisations should always pursue recovery of overpayments, irrespective of how they came to be made. In practice, however, there will be both practical and legal limits to how cases should be handled. So each case should be dealt with on its merits.” 2. The Treasury Guidelines then consider the factors a public authority should have regard to in deciding whether to pursue recovery of an overpayment. It states, at A4.11.2: “When deciding on appropriate action, taking legal advice, organisations should consider:

• the type of overpayment • whether the recipient accepted the money in good or bad faith; • the cost-effectiveness of recovery action (either in house or using external companies). Advice that a particular course of action appears to offer good value may not be conclusive since it may not take account of the wider public interest • any relevant personal circumstances of the payee, including defences against recovery • the length of time since the payment in question was made; and • the need to deal equitably with overpayments to a group of people in similar circumstances.”

3. The Treasury Guidelines then consider the question of whether the individual has acted in good faith and various other defences to recovery including defences which may be claimed against recovery, namely:

• the length of time since the overpayment was made; • change of position; • estoppel; • good consideration [this is effectively the same as a contractual defence]; and • hardship.

4. On ‘good faith’ the Treasury Guidelines say: “A4.11.5 The decision on how far recovery of an overpayment should be pursued in a particular case will be influenced by whether the recipient has acted in good or bad faith:

25 CAS-44368-C3K1 • where recipients of overpayments have acted in good faith, e.g. genuinely believing that the payment was right, they may be able to use this as a defence (though good faith alone is not a sufficient defence);

• where recipients of overpayments have acted in bad faith, recovery of the full amount overpaid should always be sought.

A4.11.6 Recipients may be inferred to have acted in bad faith if they have wilfully suppressed material facts or otherwise failed to give timely, accurate and complete information affecting the amount payable. Other cases, e.g. those involving recipients’ carelessness, may require judgement. And some cases may involve such obvious error, e.g. where an amount stated is very different from that paid, that no recipient could reasonably claim to have acted in good faith.

A4.11.7 In forming a judgement about whether payments have been received in good faith, due allowance should be made for:

• the complexity of some entitlements, e.g. to pay or benefits;

• how far the payment depended on changes in the recipient’s circumstances of which he or she was obliged to tell the payer;

• the extent to which generic information was readily available to help recipients understand what was likely to be due.”

5. On ‘hardship’ the Treasury Guidelines say at A4.11.19: “Public sector organisations may waive recovery of overpayments where it is demonstrated that recovery would cause hardship. But hardship should not be confused with inconvenience. Where the recipient has no entitlement, repayment does not in itself amount to hardship, especially if the overpayment was discovered quickly. Acceptable pleas of hardship should be supported by reasonable evidence that the recovery action proposed by the paying organisation would be detrimental to the welfare of the debtor or the debtor's family. Hardship is not necessarily limited to financial hardship; public sector organisations may waive recovery of overpayments where recovery would be detrimental to the mental welfare of the debtor or the debtor's family. Again, such hardship must be demonstrated by evidence.”

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