Pensions updates | May 2025

Mr L (CAS-92761-H7Q6)

The Local Government Pension Scheme (LGPS) administering authority did not make a perverse decision in awarding lump sum death benefits to the deceased member's daughter.

Background

Following the death of Mrs R, a member of the LGPS, her husband, Mr L, contested the decision of the administering authority, the City of Wolverhampton Council, to award the death benefit to Mrs R's daughter. The Fund's administrator informed Mr L that it was prepared to pay a death benefit of £39,590.72 to the nominee, in line with Mrs R's nomination form. The administrator asked Mr L to confirm if there were any circumstances that he considered to be relevant to the payment of the death benefits. Mr L subsequently challenged the administrator's decision, alleging that the nominee had previously made fraudulent withdrawals from Mrs R's bank account without her consent.

Following an investigation by the Council, ultimately concluded that the benefits should be paid in full to the nominee, in accordance with Mrs R's nomination form.

Ombudsman's Determination

The Ombudsman concluded that the Council had exercised its discretion appropriately in awarding the death benefit to Mrs R's daughter. The decision was not deemed perverse or unreasonable, as the Council had considered all relevant factors and followed a fair decision-making process. Consequently, the complaint was not upheld, and no further action was required by the Council.

Implications

This case underscores the importance for LGPS administering authorities to exercise their discretion judiciously when determining beneficiaries of death benefits. It also highlights that, in the absence of a nomination form or clear indication of the deceased member's wishes, the authority must assess all available information to make a fair and reasonable decision.

This emphasises the importance of members and families completing an initial nomination regarding discretionary death benefits. It is recommended that schemes remind members to review their nominations in regular communications such as annual benefit statements.

"Ready to connect" - pensions dashboards are live

The first deadline in accordance with DWP's staged timetable for the Pensions Dashboards Programme ("PDP") has now passed. The 30 April 2025 heralded the deadline for some of the largest schemes to connect.

The Pensions Regulator guidance details the necessary process to connect to the platform, whilst the government has helpful guidance with the staged timetable for connection detailed.

New consultation on the Local Government Pension Scheme ("LGPS")

The government has published a new consultation around LGPS concerning access and fairness, including survivor benefits, introducing reporting obligations regarding opt-outs, and addressing the gender pensions gap (where there is currently a lower average pension accrual for women than men). The consultations proposed operational changes will impact LGPS administrators, therefore it will be interesting to see how they develop over the course of this consultation.

Pension Schemes Bill and Surplus Release

The DWP has confirmed in a press release that it is planned for upcoming Pension Schemes Bill to allow defined benefit pension schemes to release part of their surpluses back to sponsoring employers to invest back in their businesses and unlock more money for pension scheme members.  The DWP and pensions minister Torsten Bell highlighted that the reforms will ensure surplus use is safe, member-focused and aligned with broader economic goals.  The reforms are against the current backdrop of three quarters of defined benefit schemes are now in surplus and falling deficit contributions.