Hewlett-Packard Limited Retirement Benefits Plan (CAS-44682-N7X6)

Ombudsman’s Determination

Outcome

Mr N has received overpayments as a consequence of an error that occurred in the calculation of his benefits. As a consequence, the Trustee was correct to reduce his pension to the level Mr N was entitled to under the Plan’s Trust Deed and Rules. Trustees are generally under an obligation to and have a right to recover overpayments made in error (even if the overpayments were made as a result of their carelessness), unless there is defence to recovery and/or in cases of equitable recoupment, it would not be equitable in the circumstances to recoup.

Mr N was provided with various inaccurate statements as to his entitlement in the run up to his decision to take redundancy, then in the period before accepting a severance package and payment in lieu of notice (PILON), and also in the period between leaving employment and the commencement of his pension on 6 April 2011. Most of these statements were caveated with wording to the effect that they were estimates and/or the administrators could not bind the Trustee if they proved to be incorrect. However, the 1 October 2010 statement was not caveated, and I consider it was reasonable for Mr N to rely on it in when deciding whether to accept the severance package. However, I am not satisfied that the difference between the figures for the pension and pension commencement lump sum (PCLS) issued before Mr N accepted his severance package, and the final figures awarded, was sufficient to have made a difference to his decision to accept the £81,000 redundancy package plus PILON, even though he assumed that the final PCLS and pension figures would be higher. 

I am also satisfied that, in the circumstances of the case, it would be equitable for the Trustee to seek recovery of the overpayments by recouping the overpayments over the period specified in the directions made under this determination.

Subject to obtaining an order of the County Court authorising the Trustee to commence recoupment for the purposes of section 91 Pensions Act 1995 (the 1995 Act), the Trustee may commence recoupment of the overpayments I have held to be recoverable, at the rate and over the period specified in this Determination.

I do, however, partially uphold Mr N’s complaint on the basis that Mr N has sustained distress and inconvenience as a consequence of maladministration by the Trustee in failing to ensure that the Plan was administered correctly, by calculating Mr N’s pension incorrectly, issuing incorrect retirement illustrations, and making the overpayments. I have directed that a payment of £1,500 should be made to Mr N to compensate him for the distress and inconvenience he has sustained in calculating his benefits incorrectly and issuing him a series of inaccurate estimates of his benefits.

Complaint summary

Mr N has complained that the Trustee has sought to recover overpayments when either (i) no overpayments have been made or, (ii) if overpayments have been made, he has a right for his pension to continue at the original level. Even if the Trustee demonstrated that there have been overpayments and his pension should be reduced to the correct level, he is entitled to damages for negligent misstatement and/or he could raise a number of legal defences that would prevent the Trustee from recovering the overpayment in whole or part.