The High Court has ordered the Financial Services and Pensions Ombudsman to reconsider a complaint about a pension death benefit after finding that the ombudsman made a serious and significant error of law in interpreting the scheme rules.
The appeal concerned a complaint by Vidette Molyneaux, the widow of a former member of the Analog Devices International Investment Partnership Plan. Her husband died in service in December 2016. The dispute was whether trustees had to pay the full value of his Retirement Benefit Account as a lump sum, or had discretion over whether to pay any of that account.
The account was said to be worth €912,177. The lump sum paid was €248,785.10, representing the value of employer matching contributions to the member’s additional voluntary contributions. The trustees maintained that they could choose the amount, if any, paid from the account. Mrs Molyneaux’s complaint was that the scheme required payment of its full value.
The ombudsman had accepted the trustees’ position and declined to interfere with their decision. In doing so, the ombudsman considered that Rule 5(a)(vi), which addresses a lump sum when a member dies before the full account has been applied to provide benefits, offered no help in interpreting the relevant death-in-service rule.
Mr Justice Garrett Simons found that this approach was legally flawed. The rules had to be read together, particularly because the death-in-service provision cross-referred to Rule 5(a)(vi). The court said the ombudsman’s failure to consider that rule was a fundamental error of principle that justified intervention.
The court did not decide whether the scheme makes payment of the full account mandatory. It said that remained for the ombudsman to determine after properly considering the combined effect of the rules. Nor did the High Court rehear the complaint or substitute its own decision on the benefit. The statutory appeal was limited; the appropriate course was to remit the matter for a fresh decision in light of the court’s opinion.
The court’s proposed order was to remit the ombudsman’s decision for review under section 64(3)(c) of the Financial Services and Pensions Ombudsman Act 2017. The judge’s provisional view was that Mrs Molyneaux should receive the costs of the appeal from the respondent, while the notice parties should bear their own costs. The proceedings were listed for final orders on 10 December 2021.