Complaint of maladministration made to the Pension Protection Fund Ombudsman
Mr R made a complaint of maladministration to the PPF Ombudsman in relation to the PPF Board’s interpretation of the relevant legislation regarding the payment of survivors’ benefits in the event of his death.
Mr R was a member of an occupational pension scheme (the Scheme) which transferred into the PPF in April 2014. In 2015, Mr R enquired what benefits would be paid in the event of his death as he was single with no dependants. The PPF Board explained that once a scheme is transferred into the PPF, members’ scheme benefits are no longer paid from the Scheme but are replaced with compensation administered by the PPF. The Board said the Scheme rules ceased to apply and were replaced by the PPF rules. It said, where there were no eligible dependants, entitlement to compensation would cease.
Mr R raised a complaint with the PPF Board’s Review Committee. It concluded that the PPF Board could only pay compensation in accordance with the rules set out in the relevant legislation, which allowed compensation to be paid to certain individuals. The Board also explained that it pays compensation at a statutory minimum level and does not replicate the previous scheme rules. It does not profit by not paying survivors’ benefits.
Mr R asked for the decision to be reconsidered by the PPF Board’s Reconsideration Committee, and again it was not upheld. Mr R remained unhappy on the basis that the money should legally belong to him and his estate. He disputed that the PPF funds were not attributable to individual members, as it is aware of each member’s entitlement and dealt with each member separately.
The Ombudsman did not uphold the complaint. He explained that as the original scheme had wound up, and did not have sufficient funds to pay benefits to members, it was accepted into the PPF. Instead of receiving benefits from the Scheme, members would receive compensation from the PPF. The compensation Mr R receives is governed by the appropriate legislation and the PPF Board can only pay benefits in line with that legislation. While Mr R had argued that the relevant legislation did not expressly state that compensation could not be paid to an estate, the legislation does not operate in that way. The Board can only make payments for which it is given express authority.
Related case studies
Ms H was refused an ill health retirement pension and approached us for help.
Ms R is a member of a small self-administered pension scheme. In 2014, Ms R transferred the benefits she had in a previous employer’s pension scheme to the SSAS. Ms R took a tax-free cash sum from the transfer amount and invested the remainder in Bitcoins.