For as long as I think anyone can remember trustees have had the power to decide how certain benefits are paid and to whom. This has mainly been in the area of death benefits and ill-health benefits. Trustees would often find themselves in the position that a decision favouring one beneficiary over another was always going to be unpopular with somebody and in some cases everybody. All that trustees could do was ingather all the relevant information that they possibly could obtain, including the members own wishes, consider matters fairly and objectively and make a decision which in the eyes of law was not perverse. There was always debate about how much detail the trustees should put down on paper about how they reached that decision. Some argued that full documentation of the decision making process was required in case of challenge others argued that you should record the facts, that a discussion took place and that there was a decision which was …
A recent determination made by the Pensions Ombudsman (PO-18953) has helped to clarify what his offices view is on this matter. In the view of the Ombudsman there is a need for Trustees to clearly document which key facts they have taken into account when reaching their decision. Further he considered that the thought process in reaching the decision should be documented too.
In the above case, which relates to a complaint made following a decision not to pay a discretionary spouses benefit, the Ombudsman upheld the complaint noting that the basis or rationale for the decision that had been made was not clear.
Whilst it is evident what process the Trustee had followed and what evidence had been obtained, the missing piece that the Ombudsman expected was the ‘causative link between the circumstances and the conclusion’. The Ombudsman also noted that:
“Documented reasons need not themselves be lengthy but should be sufficient to convey to the reader an understanding of the factors which have been given some weight. It may also be appropriate to record why some factors have been discounted. The reasons should be sufficient to enable an aggrieved party to know whether there are grounds to challenge the decision.” (Paragraph 22.)
This provides us with helpful guidance in relation to the discretionary decision making process and we would recommend that everyone involved in the process should review how such decisions are undertaken and in particular, how each piece of evidence obtained influenced the decision that was ultimately made. Doing so might not stop an aggrieved party feeling any less aggrieved but when it comes to a complaint it becomes easier to defend that decision as being one that the trustees could reasonably make.
Full details of the case can be found on the link below: