This is likely to be a welcome ruling for employers and trustees following recent uncertainty about whether the Pensions Ombudsman can go beyond the normal rules of limitation.
In the case, Arjo Wiggins v Ralph, a former scheme member complained about having been encouraged to transfer out of the final salary scheme to a policy with no guaranteed final salary benefits on being made redundant in 1986, rather than remaining as a deferred member.
During the Ombudsman investigation, the employer argued that the complaint, brought in July 2007, did not meet the normal three-year time limit applicable to Ombudsman cases and that the Ombudsman should not exercise his discretion to accept it out of time as the 15-year longstop that applies to negligence claims in court actions under the Limitation Act had passed.
But the Ombudsman took the view that Parliament had given him a discretion “capable of indefinitely extending the time within which a complaint may be brought” and referred to the detriment to the member of not being heard on a matter of “far greater financial significance to him than to the employer”. He considered the complaint, determining it in the member’s favour.
The employer appealed and the High Court upheld the appeal concluding that when the Ombudsman is determining disputes of law, which will include claims for breach of trust, breach of contract and negligence, he cannot take a more liberal approach than the courts.
The judgment does not change the position in relation to cases involving maladministration. The Pensions Ombudsman may still investigate complaints involving “pure maladministration” such as rudeness, delay or incompetence where the courts would not have jurisdiction to determine such a complaint because it is not a dispute of law.
According to the courts, there has been some concern that those involved in the running of pension schemes had potential exposure to claims they might previously have thought were out of time, following a number of cases where the Ombudsman has made determinations when a court would have treated them as time-barred.
This judgment provides clarification of the position.