Putting things right: case 2

Mrs B complained that her former employer and the pension scheme administrator failed to take into account an allowance she received in the pensionable salary used to calculate her benefits.

Mrs B received a basic salary plus two additional payments in recognition of her language skills. These payments were contractual and pension contributions were deducted in respect of them.

When her contract was amended her employer said she would still get the language allowance and continued to deduct pension contributions from the allowance for a period, but these were later returned to Mrs B.

Mrs B took voluntary redundancy three years later. She complained that her pension benefits were calculated using a pensionable salary figure that did not take into account her language allowance.

Her employer said that when Mrs B’s employment contract was amended her language skills were of benefit, but were no longer a requirement of the role. Her language skills and allowance were consequently no longer contractual and pensionable.

The scheme administrator said that it was the responsibility of the employer to specify in Mrs B’s contract of employment which elements of her pay were pensionable.

They relied on the provision of correct pensionable pay details to calculate Mrs B’s early retirement benefits.

We upheld Mrs B’s complaint after examining the rules of the scheme and deciding that her employer had incorrectly excluded her allowance from her pensionable pay.

We directed that the employer notify the scheme administrator of the correct pensionable pay, taking into account the allowances paid.

We also told them to arrange for a recalculation of benefits to be backdated to her date of retirement (with interest from that date) plus £150 to compensate for her distress.