Universities Superannuation Scheme · CAS-39906-D6Y9

CAS-39906-D6Y9

Ombudsman’s Determination Applicant Mr L

Scheme Universities Superannuation Scheme (the Scheme)

Respondent Universities Superannuation Scheme Ltd (the Trustee)

Outcome

Complaint summary

• The Trustee has refused to pay him an unreduced pension from age 60 and has misinterpreted the Scheme Rules.

• He was provided with deliberate misinformation by the Trustee and there were excessive delays in the handling of his enquiries.

Background information, including submissions from the parties

1 CAS-39906-D6Y9

2 CAS-39906-D6Y9

3 CAS-39906-D6Y9

4 CAS-39906-D6Y9

5 CAS-39906-D6Y9

6 CAS-39906-D6Y9

Adjudicator’s Opinion

7 CAS-39906-D6Y9

8 CAS-39906-D6Y9

Mr L did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. In support of his complaint Mr L provided a redacted letter from the University dated 22 January 2015 (the January 2015 Letter). This confirmed he could take his pension benefits unreduced.

The January 2015 Letter said:

“In terms of your request for our consent to your starting to take your pension in June 2015, you correctly state that the only basis on which you would be able to obtain unreduced benefits without actuarial reduction would be if Cambridge Assessment were to agree to these being paid. We have now found out from USS that this would required us to pay an Early Retirement Funding Charge of £63,434…

So far as the position once you reach 60 is concerned, my understanding of the USS rules is that you can take an unreduced pension from age 60 without any Early Retirement Charge being due.”

• He did not agree with the comments made in the Opinion which indicated that the January 2015 email was based on the “assumption” that the ERFC would be paid by the University. He did not consider that the Adjudicator should accept the Trustee’s “post facto” confirmation, and the omission by the Trustee should be considered at best “gross incompetence”.

• He was concerned that the Adjudicator had only accepted arguments and interpretations put forward by the Trustee despite them not being supported by the Scheme Rules or any evidence.

• The May 2010 Letter providing his DBS also confirmed he could take benefit unreduced at age 60.

• He had worked on legal contracts, and he considered the Adjudicator was wrong and he met the criteria in Rule 11.2.3, as he had reached age 60, and the University could not reasonably withhold its consent.

• The legal advice the Trustee received would not stand up to legal scrutiny and was made solely with the purpose of negating his claim.

• A Former Member was someone who ceased to be a member. He has continued to meet the definition of a member throughout the period prior to taking his pension. He could only cease to be a member if he withdrew under Rule 36.

• He incurred delays when he was waiting for his benefit statement in 2010.

9 CAS-39906-D6Y9 • He had experienced other delays when he made basic queries.

• He had made a Subject Access Request in 2019 and when this was provided certain documents had been omitted. The University has not provided him with a copy of the legal advice. The lack of openness and transparency by the Trustee meant he doubted that the full information had been released. As such, he believed there has been a deliberate obfuscation over a sustained period.

The Trustee said in response to Mr L’s additional points:-

• The Adjudicator’s point about the Trustee issuing a response to the University based on the “assumption” that the University would be paying the ERFC, was correct taking into account the context of all the correspondence referenced in the Opinion.

• It refuted that the statement in the May 2010 Letter gave Mr L an unequivocal right to an unreduced pension.

• Mr L did not satisfy the relevant criteria under Scheme Rule 11.2 when he left service as he was not made redundant, had not attained age 60 and the University did not give consent for early payment.

• The January 2015 Letter clearly stated that the University was not willing to pay the ERFC. This was justified by the University on the basis which has been redacted from the letter.

• The January 2015 Letter incorrectly stated that Mr L could take benefits unreduced from age 60. However, this was corrected shortly after by the Trustee in February 2015 when he was told his pension benefits would be reduced for early payment, so Mr L was fully aware of the accurate position prior to retirement.

• Mr L refers to other delays, but he would need to make a new complaint about any specific delays to the Trustee and it would deal with them via its IDRP.

• It considered the Opinion was robust and legally sound.

I agree with the Adjudicator’s Opinion and note the additional points raised by Mr L which do not change the outcome.

10 CAS-39906-D6Y9 Ombudsman’s decision

11 CAS-39906-D6Y9

I do not uphold Mr L’s complaint

Anthony Arter

Pensions Ombudsman 1 February 2022

12 CAS-39906-D6Y9

Appendix 1 Extract from DBS of 12 May 2010

“Your deferred benefits will come into payment when you reach age 65. However, if you were over the age of 50 but under the age of 55 when you left the scheme, from 6 April 2010 the earliest you would be able to claim your retirement benefits would be age 55. You may apply to Universities Superannuation Scheme Ltd to bring your benefits into payment without reduction subject to the following:

• You had five years or more pensionable service and were made redundant or left employment at the request of your employer, or • You had less than five years’ pensionable service and were made redundant and subsequently have been made redundant again: or • You left employment after the age of 60 in accordance with the terms of your appointment or contract of employment.

In some circumstances you have the right to receive your deferred benefits from age 60 and can apply to receive these benefits from age 50 subject to the agreement of Universities Superannuation Scheme Ltd. A reduction may apply as described below if you retire before age 65 …Benefits in respect of service from 6 April 1995 will be payable without reduction if retirement is on or after you attain age 63 ½.”

13 CAS-39906-D6Y9 Appendix 2 Extract from the Scheme Rules dated 30 April 2009

“Active Member” means a member who is an eligible employee …

“Former Member” means an individual who ceased to be a member.

“Member” means

(a) an eligible employee who is a member of the scheme in accordance with rule 5 (Terms of entry): or (b) an individual who immediately before the effective date was a member of the scheme by virtue of its rules then in force, who would have remained so on the effective date had those roles been suspended

and who has in either case not withdrawn under rule 36 in respect of all eligible employments and “Membership” has a corresponding meaning.

“Minimum Pension Age” means, in relation to any member, former member or ex-spouse participant, age 55…

5.1 Eligible employee

An eligible employee is an employee of an institution participating in the scheme who is either

5.1.1 employed by a university or university college in an academic, research or related post …

11. Early retirement at the instance of the employer

11.1 Members to whom rule applies

This rule applies to a member:

11.1.1 who has 5 or more years’ pensionable service (calculated without applying the part time service fraction for his purpose):

11.1.2 who has attained minimum pension age:

11.1.3 has not in respect of the eligible employment become entitled to a pension under any rules 8 (benefits at normal retirement), 10 (late retirement) and 13 (Early pensions on incapacity): and

11.1.4 to whom Rule 11.2 (applicable circumstances of retirement) applies.

14 CAS-39906-D6Y9 11.2 Applicable circumstances of retirement.

This rule applies to a member:

11.2.1 whose eligible employment is terminated by reason of redundancy; or

11.2.2 whose employment is terminated in the interests of the efficient exercise of the institution’s functions…and the employer gives consent to payment of the benefits; or

11.2.3 who has attained age 60 and retires with the consent of the employer (such consent is not to be unreasonably withheld).

11.3 Benefits

A member to whom this rule applies may elect to receive from the date after the date of retirement.

“Retirement” - the cessation, on or after the minimum pension age of employment which gives entitlement to membership without the member taking any other employment which would give entitlement to membership.

14. Preserved benefits

14.6 Other former members

In the case of a former member to whom sub rules 14.3 and 14.5 do not apply:

14.6.1 the trustee company shall bring the preserved benefits into payment on request from the date specified by the former member when the former member is aged 60 or over.

14.6.2 the trustee company may bring the preserved benefits into payment on request from the date specified by the former member where the former member has attained minimum pension age, but not age 60,

on such terms as the trustee company shall decide, acting on actuarial advice, subject to complying with the preservation requirements and provided that the early payment of the preserved benefits does not result in the pension payable to the former member being less than the GMP.

15