Recovery in overpayment cases: The Pensions Ombudsman's (PO) response to the Court of Appeal ruling that it is not a "competent court" for the purposes of recoupment in overpayment cases.

In our recent blog, we reported on a Court of Appeal ruling that the Pensions Ombudsman is not a "competent court" for the purposes of recoupment in overpayment cases. The effect of the decision is that a determination of the PO on its own is not enough to allow trustees to recoup overpayments of pension where there is a dispute. Instead, to be able to enforce the PO decision, trustees will need to apply to a County Court (or Sheriff Court in Scotland) for an order.

The PO has now provided a response and a factsheet which are intended to provide guidance on management of overpayment disputes, along with its first overpayment Determination since the ruling.

In the response, the PO has expressed its disappointment at the ruling, noting that it is rare for determinations to require enforcement in the County Court and so the requirement for the Court's involvement in overpayment cases, before recoupment can begin, presents an additional hurdle for all parties.

The PO also confirmed that the Department for Work and Pensions is supporting legislative changes to formally empower the PO to bring an outstanding overpayment dispute to an end without the requirement of enforcement proceedings.

In the meantime, the PO's factsheet is intended to provide guidance on how to manage overpayment disputes. Whilst it does explain in some detail how a trustee or scheme administrator can follow the County Court process for enforcement action using the County Court (Pensions Ombudsman) (Enforcement of Direction and Determinations) Rules 1993, this is exclusive to the courts of England and Wales and a different court procedure will apply in Scotland and Northern Ireland.

The factsheet also emphasises that the County Court will not revisit the merits or facts of the complaint; the County Court's role is limited to authorising the pension scheme to recoup the overpaid amount from the member's future benefits.

In the PO's first Determination on overpayment since the ruling by the Court of Appeal, as per the factsheet, the Determination sets out a schedule noting the amount and rate of recoupment for use by the County Court for enforcement proceedings. The PO has confirmed in its response that a schedule should be expected for all future PO Determinations on this topic, providing some further clarity for trustees in how to approach such matters.

If you would like to discuss anything raised in this blog in more detail, please get in touch with a member of the pensions team or your usual Brodies contact.

Contributors

Juliet Bayne

Partner

Jennifer Crawford

Senior Associate

Ellie Williams

Solicitor