Pensions: The employer had a duty to inform a member about the impact of re-employment on the protected pension age status
Published 10 February 2016
In this case, the Pensions Ombudsman determined that a Police and Crime Commissioner had a duty of care as an employer to provide a police officer with relevant information about the possible tax implications of re-employment on his retirement benefits.
A police officer left police service and took his scheme benefits in June 2011, but was re-employed in materially the same role less than a month later. His re-employment in these circumstances resulted in his losing his protected pension age of 50, and his past and consequently future pension payments up to age 55 (being the normal minimum pension age under a registered pension scheme which on 6 April had increased from 50 to 55) were unauthorised payments and attracted tax penalties. He complained to the Pensions Ombudsman, which upheld his complaint on the basis the Police and Crime Commissioner had a duty of care as a "responsible" employer to provide the officer with relevant information about the tax implications of re-employment on his retirement benefits, as had been contained in a Home Office circular that had been published in relation to members of the Police Pension Scheme in 2006.
The Ombudsman directed the Commissioner to reimburse the police officer for tax charges arising directly from his loss of the protected pension age status.
What does this mean for employers?
Employers and pension trustees and administrators should take note of this determination and ensure appropriate steps are taken to inform members about significant legal and regulatory changes that may be relevant to their benefits. However, it should be noted there is no legal obligation to advise individual officers and employees about their tax and pension liabilities – instead, having been provided with the relevant information indicating there could be an impact on a member's benefits, the individual should be directed to seek independent advice.