In an interesting decision from the Pensions Ombudsman, it seems that there are situations where there is a positive obligation on employers to provide information about the impact of re-employment following retirement where this has a marked affect on an employee’s pension. 

Facts

The facts of the case are relatively straightforward. Mr Cherry was employed as a police officer and was a member of the Police Pension Scheme. After nearly 30 years’ service he left active service and took his retirement benefits in June 2011. He was re-employed less than a month later in a role that was substantially the same as the role he had recently left.

Mr Cherry subsequently discovered that his re-employment in a similar role meant that he no longer benefited from having protected pension age status and the payments he had received and would continue to receive before he reached the age of 55 were unauthorised payments and, as such, subject to additional tax charges.

The Ombudsman held that as a responsible employer, the Police Commissioner was under a duty to provide Mr Cherry with information about the potential impact of his re-employment on his pension rights and ordered it to reimburse him for the additional tax charges he had incurred.

Comment 

This decision follows two further very similar decisions from the Pensions Ombudsman and is a marked departure from its previous decisions. 

It is also interesting to look at this decision in the light of case law in the courts where it has been held that there is no general duty on an employer to give advice to employees about pensions except in very limited circumstances, where a particular term of a collectively agreed contract makes available to the employee a valuable right provided he takes a particular course of action, and where the employee cannot reasonably be expected to be aware of the term unless it is drawn to his attention.

In this decision, the Pensions Ombudsman made a distinction between giving advice and merely providing information and made it clear that whilst there is no legal obligation on an employer to give advice about pension rights, an employer does have a duty to provide relevant information to employees. However, sometimes there is a fine line between providing information and giving advice. Employers should be mindful of this decision and consider whether they need to take steps to inform employees about significant legal and regulatory provisions or changes that may affect their entitlement to pension and other benefits as a result of a particular course of action.

Determination in a complaint by Mr John Cherry, 22 December 2015 (PO-7096)