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Mr S (CAS-44597-S2Z6): Pensions Ombudsman confirms uniform accrual exemption; accrual and earnings caps lawfully retained despite 1989 HMRC changes; no breach of PSA 1993 preservation requirements

Published on: 27 February 2025

Published by a LexisNexis Pensions expert
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Original news Mr S (CAS-44597-S2Z6)—17 October 2024

Summary

The Pensions Ombudsman dismissed a complaint about how the preservation laws were applied to a scheme’s benefit structure and accrual design. The scheme rules imposed both an accrual cap and an earnings cap. The Ombudsman concluded there was no breach of preservation legislation because the scheme’s uniform benefit accrual operated as an exception to the general principle that short-service benefits must be calculated on the same basis as long-service benefits. In addition, a 1989 change to HMRC rules did not require the removal of the caps that had been hard-coded into the scheme rules. The decision highlights that older HMRC provisions, once embedded within a pension scheme’s own rules, can be difficult to interpret and apply in practice.

What were the facts?

Mr S was a deferred member of the Svenska UK Retirement and Death Benefit Scheme (the Scheme). The Scheme rules applied both an accrual cap and an earnings cap...

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