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Complaints to the Pensions Ombudsman – when will he make an award for non-financial injustice?

From time to time a member or beneficiary may have a complaint which cannot be resolved through liaison with the employer and trustees or the scheme’s internal dispute resolution procedure. He may then take his complaint to the Pensions Ombudsman.

The Ombudsman is a free service for members or beneficiaries who have a complaint. He can investigate and determine disputes of fact or law or complaints of maladministration by those responsible for managing a scheme.

The Ombudsman has a wide power to direct a respondent to a claim to “take, or refrain from taking, such steps as he may specify” [1]. He can order the person at fault to pay compensation or take other steps to put matters right. The Ombudsman’s powers also extend to a respondent having to provide reasonable compensation for ‘non-financial injustice’.

The newly appointed Pensions Ombudsman, Anthony Arter, has recently published a fact sheet providing guidance about redress for non-financial injustice.

What is non-financial injustice?

Non-financial injustice includes the inconvenience suffered by an applicant in relation to the maladministration and the time and effort of having to make a complaint. For example, if the trustees could have identified and avoided the circumstances leading to the maladministration the Ombudsman may decide to make an award.

Non-financial injustice also includes ‘distress’ which encompasses concern, anxiety, anger, disappointment, embarrassment or loss of expectation. This can vary in degree from mild to anxiety that might require medical assistance.

In all cases the non-financial injustice must be caused directly by the maladministration.

How much might the Ombudsman award the applicant?

The Ombudsman’s awards for non-financial injustice tend to be fairly low. In the majority of cases a monetary award will range from £500 to £1,000.

The award might simply require the respondent to make a formal apology.

The Guidance notes that, although the Ombudsman will always take account of the individual circumstances of a case, similar cases should result in “consistent and broadly comparable awards”.

It suggests that the starting point should be £500. An award in excess of £500 is unusual, and caselaw has restricted the level of an award to £1,000 unless there are exceptional circumstances [2]. Such circumstances might include ill-health or where lifestyle choices were affected. For example, in Payne (PO-107) £2,500 was unusually awarded for distress and inconvenience suffered where the applicant had based a decision to take voluntary redundancy on incorrect pension illustrations. However, settlements should not result in an applicant gaining an advantage.

How does the Ombudsman assess non-financial injustice?

The Ombudsman will consider the particular circumstances of the individual but also ask whether a reasonable person would have reacted in the same way. The award will not directly correlate to time spent or be equivalent to the costs which would have been charged by a professional adviser on the matter. However, the Ombudsman will look at whether the complaint could have been avoided, whether there were excessive delays and how the respondent handled the complaint.

How can trustees and administrators avoid such awards being made against them?

A finding of non-financial injustice means that there has been a finding of maladministration. It might have been possible for this maladministration to have been addressed at a much earlier stage in the complaints process, perhaps avoiding the need for a complaint to the Ombudsman at all. It is important that any dispute or complaint submitted under the internal dispute resolution process is carefully managed so that steps can be taken to address relevant issues and any potential maladministration that might have occurred. While the awards themselves are rarely high in financial terms, time and energy spent in responding to Ombudsman complaints could be better spent elsewhere. Those involved in the management of a scheme should take member complaints seriously and have robust, documented procedures in place to deal with them.

This post was contributed by Rachel Stevens. For more information, email

[1] Section 151(2) Pension Schemes Act 1993

[2] Swansea City Council v Johnson [1999], Ch 189 and Law Debenture v Malley [1999] OPLR 167

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This blog is intended only as a synopsis of certain recent developments. If any matter referred to in this blog is sought to be relied upon, further advice should be obtained.