Pension schemes should ensure that all information given to members about their benefits is as accurate as it can be. However, even when the best of efforts are made, errors can still occur from time to time. And, when they do, they are a common subject of member complaints.

Members are generally only entitled to receive their correct benefits under the scheme rules, even where they have been given an overstated quote. However, members may be entitled to compensation if they have suffered financial loss as a result of relying on inaccurate information. To have a claim for loss, a member must show that this reliance was reasonable.

Member communications, particularly benefit quotations and statements, will often contain standard “disclaimer” wording explaining that the figures quoted are not guaranteed. But what does that mean in the event of a complaint?

The relevance of disclaimers

In a recent determination, TPO reminded trustees and administrators that disclaimers are “not always a “get out of jail free card”.

The complaint concerned an incorrect benefit statement received by a member, Mr E, in 2014, which appeared to show an additional five years’ of pensionable service.  He called the scheme administrator at the time to query this and was assured by two different call handlers that the statement was correct. Mr E argued that he relied on the statement when making plans, including leaving teaching and buying a house. The error was only spotted in 2020 when Mr E applied for his pension.

Mr E sought compensation for losses suffered as a result, but the scheme relied on disclaimer wording in the statement which had said “although every effort has been made to ensure accuracy, it is for illustration only and does not give you entitlement to the retirement benefits quoted. At retirement your membership history will be scrutinised to ensure benefits are calculated on the correct service.”  TPO nonetheless upheld the complaint, awarding Mr E compensation for financial losses and £1,000 for distress and inconvenience.

In his determination, TPO explained that reasonable reliance is a factual question to be considered in the specific circumstances of each individual complaint.  Disclaimer wording is only one relevant fact and will not always be conclusive on its own. While in the normal course of events disclaimers of this type would “generally be sufficient to prevent reliance on such a statement”, in this case express assurances were given to Mr E by telephone that his statement was correct. It was therefore reasonable for him to have relied on the statement, despite the disclaimer.

What does this mean for trustees and administrators?

Trustees and administrators should always take care to ensure that information provided to members is complete and accurate. However, even with good systems and processes in place, misquotes can still arise. In these cases, disclaimers are still relevant, serving both as a reminder to members that the figures are not guaranteed and as an important tool to protect trustees and administrators from claims.  Schemes should continue to include disclaimers in relevant member communications where appropriate.

However, disclaimers are just one part of the overall picture. When investigating misquote complaints, trustees should therefore look at all the circumstances of the individual case and be aware that a disclaimer may not always be capable of saving the day.