Following on from the case of John Cherry, the Pension Ombudsman has held that whereas there may be a duty on an employer to provide relevant information about an employee’s pension rights so he can make an informed decision, there is no duty to advise an employee about the availability of a more favourable pension.
Facts
Mr Ascough was employed by Worcestershire County Council. He suffered from a brain tumour but, following successful surgery, had been able to return to work. On 8 January 2013, Mr Ascough attended a meeting about his proposed redundancy at which he mentioned his ill health, but there was no discussion about him leaving on grounds of ill health rather than redundancy. Mr Ascough made contact with the Council’s pension team on 15 January 2013, noting his ill health and the fact that he would be unlikely to receive his pension, and expressing a concern that if he was made redundant and therefore left employment, his wife would not receive a death in service payment. It was suggested that Mr Ascough should consider applying for early release of his pension benefits on medical grounds following his redundancy.
Mr Ascough’s employment was terminated on grounds of redundancy on 31 May 2013. He applied for a pension in September 2013, and this was granted on the basis of early payment of his deferred pension, not an enhanced pension. Mr Ascough subsequently discovered that had he applied for an early pension on ill health grounds, he (and his widow in the event of his death) would have been entitled to a much more favourable enhanced pension. He asked the Council if he could exchange his redundancy benefits for ill-health benefits but this was not possible.
Mr Ascough died on 1 September 2014 and Mrs Ascough brought a complaint to the Pension Ombudsman on the basis that her husband should have been advised about the option of an enhanced ill-health pension before he left employment.
Decision
The Pension Ombudsman did not uphold Mrs Ascough’s complaint.
To be entitled to an enhanced ill-health retirement benefit, Mr Ascough’s employment had to be terminated on grounds of ill-health. The Pension Ombudsman was unable to find anything in the Council’s discussions and communications with Mr Ascough, to suggest that the termination of his employment was on grounds other than redundancy. Nor was the Ombudsman able to find any evidence to suggest that the Council had misrepresented the position to Mr Ascough, or that Mr Ascough had followed up the suggestion in January 2013 that he enquire about retirement on medical grounds. It was therefore concluded that, while Mr Ascough may have misunderstood the benefits available to him, any misunderstanding on his part was not due to any advice the Council may have given him.
The Council had no reason to believe that Mr Ascough’s condition had worsened or that they needed to consider him for an ill-health pension before his employment was terminated. However, the Ombudsman stated that even if Mr Ascough had informed the Council of his deteriorating health, unless he had actually applied for an ill-health pension, the Council had no duty to advise him of the option to take ill-health retirement.
Comment
The extent to which an employer is obliged to provide advice and information to its employees about pensions and other financial benefits remains a grey area. The decision in this case is in direct contrast to the decision of the Pension Ombudsman in Cherry, and whilst there are differences between the two cases – in Cherry the issue was the provision of relevant information about pension rights, and in Ascough whether there was a duty to advise about pension rights – there is a fine line between providing information and giving advice. Employers would be well advised to ensure that employees are provided with all the relevant information when decisions have to be made about their pension rights.
Ascough (PO-7834)
