In the case of Smith v Sheffield Teaching Hospitals NHS Foundation Trust, the court increased the level of a Pensions Ombudsman award for maladministration. The High Court judge held that the Deputy Pensions Ombudsman (DPO) had erred in law in making a maladministration award of £500 (the bottom end of the scale for such awards) and awarded £2750 instead.

Key factors were: (a) the number of occasions on which misleading information had been provided to the member and the length of the period in which misleading information had been provided (6 years immediately prior to the member's retirement); and (b) the ease with which the correct position could have been established (ie simply by referring to the scheme rules).

The case concerned a member of the NHS Pension Scheme. Members who met specified criteria were entitled to Special Class Status (SCS) allowing them to retire at 55 on an unreduced pension. One of the criteria was that only certain roles carried potential eligibility for SCS. The member moved from an SCS to a non-SCS role, having repeatedly been advised by her employer that provided she moved back to an SCS role within 5 years she would retain SCS. This ignored the additional requirement that a member could only retire on the SCS basis if she had spent the whole of the last 5 years in an SCS role. The member moved back to a SCS role before retirement and retired at age 55. It was then established that because the member had not been in a SCS role for the whole of the previous 5 years, she was not entitled to SCS. Her pension was accordingly reduced for early payment.

The DPO rejected the member's claim for financial loss, holding on the facts of the case that the member would have retired at age 55 even had she received correct information. (It was common ground that the member would still have moved to her non-SCS role which came with higher salary and status.) The High Court upheld this aspect of the determination, but held that the DPO had been wrong in law to make an award for maladministration at the bottom end of the scale, namely £500. The High Court awarded £2750. The judge's reasoning was:

• The DPO had found only one instance of maladministration, but there had been a chain of pension estimates and summaries which overlooked the requirement to serve for 5 years in an SCS post immediately before retirement. Each of these amounted to an instance of maladministration. The number of instances of maladministration was material to the likely level of distress.
• The distress at learning that information provided over a 6 year period leading up to retirement had been inaccurate was likely to be of a different order from that occasioned by a single instance.
• There had been a period of about 4 months during which there had been a debate between persons responsible for the member's pension re whether or not the member was entitled to an unreduced pension. This had prolonged the period of distress and uncertainty.
• The level of offer that had been made by the member's employer demonstrated the employer's understanding of the level and duration of distress. (NB It is not clear from the judgment what the offer was.)

The judge said that the top end of the "normal" band was £1600. (This reflects recent case law.) Factors which justified making an award in excess of the normal band were (a) the ease with which the correct position could have been established (as the position was set out in the Scheme's governing regulations) and (b) the period through which the maladministration persisted. The question of whether the member had suffered financial loss and whether the level of the award for maladministration were two separate issues. The fact that the member had not suffered financial loss did not make it necessary to reduce the award for maladministration.

Comment

The factors that led to the Court making an award in excess of the normal band for non-financial loss are not that unusual: a failure to have regard to the precise wording of the rules, and wrong information that was provided over a period of years. Trustees should therefore note that whilst £1600 represents the upper end of the "normal" band for awards for non-financial loss, this case may increase the number of instances where the Ombudsman makes an award in excess of that figure.