Thew case: Deputy Pensions Ombudsman rules on the effect of changes to state pension age on scheme rules

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Pensions Pieces — February 2014: the Deputy Pensions Ombudsman rules on the effect of changes to state pension age on scheme rules - .PDF file.

The Deputy Pensions Ombudsman (DPO) has considered a case where scheme rules refer to the state pension age (SPA) and the effect of legislative changes to the SPA. The DPO has ruled that the starting point must be the definition of SPA in the rules and whether it provides for changes in SPA brought in by legislation. The DPO also considered possible discrimination issues for a scheme whose rules refer to SPA and the problem of communicating the correct SPA to members. The lesson for others whose schemes seek to ‘integrate’ with state pension provision is that, while there is a degree of flexibility as to how that may be achieved, the position must be clearly communicated to members.

Mrs Thew had two periods of employment with Marks & Spencer during which she was a member of the Marks & Spencer Pension Scheme.

The first period ran from September 1972 to May 1981. Under the relevant scheme rules, when she left for the first time, a member was entitled to a pension from normal retirement date (NRD), 60 for women and 65 for men, less a state pension deduction (SPD). The effect of the SPD in the rules was that if a member took their pension before SPA they would receive their pension in full until they reached SPA, at which point their pension would be reduced by the amount of the state pension, which they should, by then, be receiving. At the point of leaving service, Mrs Thew’s SPA was 60 according to the scheme rules…

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