Court of Appeal Determines Pensions Ombudsman Not Competent Court for Recouping Overpaid Pension Benefits

Citation: [2023] EWCA Civ 1258
Judgment on

Introduction

In the case of The Pensions Ombudsman v CMG Pension Trustees Limited & Anor [2023] EWCA Civ 1258, the Court of Appeal (Civil Division) delivered a decision pertaining to the Pensions Act 1995, specifically section 91(6). The central issue was whether the Pensions Ombudsman could be considered a “competent court” for the purpose of recouping overpaid pension benefits. The case delved into principles of statutory interpretation and the jurisdiction of the Pensions Ombudsman regarding disputes on overpayments of pension scheme benefits.

Key Facts

The matter arose when CMG Pension Trustees Limited needed clarification on complex questions related to the construction and effect of the rules of the CMG UK Pension Scheme. Consequently, certain members were identified as having received overpayments. The legal questions centered around whether, in cases of overpayment disputes, a trustee must secure a “competent court” order before deducting overpaid sums from future pension payments, pursuant to section 91(6) of the Pensions Act 1995.

The High Court, in its judgment, determined that an order from a competent court was necessary, a declaration was adequate without a repayment order, and the Pensions Ombudsman did not qualify as a “competent court.” The Pensions Ombudsman appealed this aspect of the judgment, leading to the case at hand.

The Court of Appeal undertook a detailed analysis of the following legal principles:

  1. Statutory Interpretation: The court emphasized ascertaining the meaning of statutory text by considering the words’ natural context and purpose, referring to seminal decisions such as Kostal UK Ltd v Dunkley and R (O) v Secretary of State for the Home Department.

  2. Jurisdiction of Pensions Ombudsman: The court scrutinized the Ombudsman’s statutory powers under the Pensions Schemes Act 1993 (PSA 1993), noting that the Ombudsman’s determinations are binding and final subject to an appeal on points of law. It was significant that the Pensions Ombudsman could not initiate investigations into disputes at the behest of trustees but rather only when referred by members or their representatives.

  3. Enforcement of Pensions Ombudsman’s Decisions: The court clarified that while the Pensions Ombudsman’s determinations are enforceable in the County Court ‘as if’ they were judgments of that court, this does not imbue the Ombudsman himself with the attributes of a court.

  4. Definition of “Competent Court”: A “competent court” must have the authority to adjudicate disputes and have enforcement powers. The Pensions Ombudsman’s lack of such powers suggests that it does not fit within this definition for the purposes of section 91(6) PA 1995.

  5. Recoupment of overpaid pension benefits: The relevant statutory provisions (section 91 of the Pensions Act 1995) were examined, with particular focus on the ‘dispute’ aspect in section 91(6) and the phrase “has become enforceable under an order of a competent court.”

Outcomes

The Court of Appeal dismissed the appeal, affirming the decisions of the High Court. It held that:

  • The Office of the Pensions Ombudsman is not a “competent court” within the meaning of section 91(6) PA 1995.
  • The Pensions Ombudsman can determine complaints about overpayment and provide directions for the recoupment of such overpayments.
  • Any determinations and directions made by the Pensions Ombudsman can be enforced through administrative processes in the County Court, with no need for further judicial consideration.
  • There is no requirement for initiating a separate action in County Court to secure an enforceable order where the Pensions Ombudsman has provided a determination on the dispute.

Conclusion

The Court of Appeal’s decision clarifies the scope of the Pensions Ombudsman’s role within the statutory framework governing occupational pension schemes and the recoupment of overpaid benefits. The Pensions Ombudsman’s determinations on overpayments are enforceable directly in the County Court, without necessitating further judicial inquiry, but the Ombudsman itself does not constitute a “competent court” for enforcing monetary obligations under section 91(6) PA 1995. This outcome maintains the Pensions Ombudsman’s intended purpose as an accessible and less formal avenue for resolving pension-related disputes, while delineating the limits of its authority in the statutory landscape.