Case law update: Frankham (84749/2) — Deputy Pensions Ombudsman determination

The Deputy Pensions Ombudsman has held that the trustees of a pension scheme should pay £1,400 as compensation for the distress and inconvenience caused by having raised the expectations of a member about pension increases and repeatedly ignoring requests for clarification.

Dr Frankham was made redundant from Akzo Nobel in July 2004, after which he became a deferred member of the Akzo Nobel (CPS) Pension Scheme. Dr Frankham received a letter dated 26 July 2004 from an in-house administrator at the scheme explaining that his pension increases would match the Retail Prices Index (RPI) inflation ‘up to a maximum of five per cent for all time’.

Subsequently, on 30 April 2009, the trustees of the scheme wrote to members, including Dr Frankham, stating that the temporary period of full increases in line with RPI, which had been agreed between the trustees and Akzo Nobel in 1998, expired in 2008. The letter further explained that from April 2009 benefits accrued after 6 April 1999 would still be increased in line with RPI (but capped at five per cent) but those benefits accrued before 6 April 1999 would be increased by the higher of: (i) the increase in RPI (subject to a five per cent cap) and (ii) 70 per cent of the increase in the RPI…

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