Outram v Academy Plastics [2000] IRLR 499
We reported recently the High Court's decision in University of Nottingham v Eyett which considered whether an employer or administrator was obliged to inform a pension scheme member of the rights which he or she might have under a pension scheme. The same point has now being considered by the Court of Appeal and the same conclusion has been reached.
Mr Outram was a member of his company's pension scheme until March 1994 when he resigned from the company. He rejoined the company but did not rejoin the pension scheme. He had to resign on the grounds of ill health eight months later and died shortly after that. He had a period of membership of the scheme arising from his service up to March 1994 but when he left, he was treated as an early leaver: he therefore had a frozen, or deferred, pension. If he had rejoined the pension scheme when he rejoined the company he would have been entitled to an ill health pension, but he couldn't get that as a deferred pensioner. His widow claimed that the company should have told him that he should rejoin the scheme.
The case is slightly unusual in that the company was not only the employer, but it was also the trustee and administrator of the Pension Scheme. As a result of the Pensions Act 1995, that is no longer possible, but it meant that the Court of Appeal looked at the duties that are owed not only as an employer, but also as the trustee of the pension scheme, when an employee has a major decision to make (such as whether to join the pension scheme). The High Court has already ruled that a trustee has no obligation to give advice which is not requested and in the University of Nottingham case the High Court held that there is no such obligation on the part of the employer. Both points have now been supported by the Court of Appeal.
It is important to note that what happened here is that the employer/trustee failed to give any advice - the allegation was not made that the advice which was given was faulty. There are numerous cases where employers or pension scheme administrators have given advice which turns out to be wrong: the typical case is where an estimate of pension benefits is given and on the strength of the information provided, the employee decides to retire. Giving misleading information can give rise to a right to compensation.
Failing to provide advice which is not requested does not.
The important point to learn from this case, and from the University of Nottingham case is that it is important for members to find out as much as they can about the pension scheme of which they are a member, or to find out about the consequences of joining, or of not joining a pension scheme which is made available. If in doubt, ask. The employer or the scheme administrator can be held to any advice which they give but cannot be held responsible if you do not ask in the first place.