Exercising discretion – The case study of Miss H

Miss H is a member of the Local Government Pension Scheme (the Scheme). In August 2014, she was made redundant, but before this, she had asked her employer, Nottingham College, if pension contributions would continue to be paid until her 65th birthday (the Scheme’s normal retirement age). Nottingham College confirmed before, and after, Miss H had left service that this would happen.

However, on receiving details of her retirement benefits from the administrating authority, Miss H was told that the employer would not award any additional benefits beyond her redundancy date. Miss H raised a complaint with Nottingham College and asked for it to be considered under the Scheme’s IDRP. Nottingham College responded, but failed to do so under the IDRP. The complaint was finally considered under the second stage of the IDRP by the administering authority following representation from Miss H’s union representative. The complaint was upheld and remitted back to Nottingham College on the basis that the Scheme regulations allowed for a discretionary payment of up to £6,500 to augment members’ benefits following redundancy.

It also noted that Nottingham College had “unlawfully fettered its discretion by applying a blanket policy not to award additional pension in reaching its original decision.”

Nottingham College considered the matter again and decided not to make any further awards to Miss H. Its main reasoning related to costs, but it did not provide any evidence of what these costs were. Miss H disagreed with the new decision and asked for the matter to be considered again under the Scheme’s IDRP. After some time, Nottingham College decided not to consider the complaint under the IDRP and the complaint was passed to the administrating authority. The administrating authority upheld the complaint again and remitted the decision back to the employer. This time, it highlighted that the employer could not state that costs were the reason for rejecting Miss H’s claim, as it had failed to evidence what the level of additional costs would be and why the additional costs would not be acceptable. On reconsidering the matter, Nottingham College again rejected Miss H’s claim, but failed to give an adequate reason for its decision.

Miss H made a complaint to this office and the Adjudicator’s Opinion was that it should be upheld. The view was that Nottingham College had failed to exercise its discretion correctly in line with the Scheme regulations; it had failed to take into account relevant information; and it had failed to show, repeatedly, how it reached its decisions. The Adjudicator also raised concerns with the way in which Nottingham College had ignored the IDRP process and failed to take into account Miss H’s health when dealing with her. The Adjudicator said the decision should be remitted back to Nottingham College, with specific instructions on what to do, and to pay Miss H £1,000 to recognise her significant distress and inconvenience. Nottingham College accepted the Opinion and thanked the Adjudicator for the guidance provided.