Employer found against death grant case
This month I will be discussing the determination given by the Pensions Ombudsman in a complaint against the Royal Borough of Kensington and Chelsea, and Capita (which administered the pension scheme) about RBKC’s exercise of its discretion as to the recipient of a lump-sum death benefit.
The Ombudsman upheld the complaint against RBKC but dismissed the complaint against Capita. This was on the basis that RBKC had failed to take account of the position of the member’s parents, identified in the beneficiary nomination form.
Ms McNee was an employee of RBKC and a member of the Local Government Pension Scheme. She was awarded deferred benefits when she left RBKC in November 2010. In March 2005, she had nominated her parents to receive a death grant (50 per cent each) in the event of her death.
Ms McNee died in September 2011. Mr W and another had been appointed as Ms McNee’s trustees, and her son’s father (Mr R) and another had been appointed as guardians for her son. Capita was informed of Ms McNee’s death by Mr W. It sent Mr W some forms to complete and requested copies of the death certificate, as well as birth and marriage certificates. Mr W complied with this request. He sent a number of items, including the birth certificate of Ms McNee’s son, who was born in 2009. He also sent a copy of Ms McNee’s will, which was dated 8 April 2010 and provided for the residuary estate to be held on trust for the son.
Capita sent the documents to RBKC, asking whether this was enough to determine who should receive the death grant. RBKC responded, asking Capita to determine whether the parents were still alive. Capita wrote to Mr R to make enquiries.
In December 2011, Capita notified RBKC that it had been informed that Ms McNee’s parents were still alive but it was still waiting for contact details. It also informed RBKC that Mr R would appeal any decision to pay the death grant to Ms McNee’s parents on the grounds that the nomination form had been completed in 2005 before the birth of Ms McNee’s son. Capita noted that Ms McNee’s will had been revised after the birth of Ms McNee’s son in favour of her son.
RBKC’s director of HR and general services decided that the grant should be paid to Ms McNee’s estate, since the nomination form was advisory only. The executors would then obtain probate and the money could be paid to the son. Capita was informed of this decision.
In February 2013, the case was referred to RBKC’s Bi-borough director of HR, who decided that the grant should be paid to the executors “for the use and benefit of” Ms NcNee’s son. Ms McNee’s parents had not been contacted. Capita wrote to Mr R informing him of this decision.
In April 2013, Mrs McNee sent a copy of the death grant nomination form to Capita, arguing that the form clearly stated that her daughter had wanted any monies to be paid to her parents. Capita responded saying that RBKC had made the decision that the death grant should be paid to the executors under Ms McNee’s will. Mr and Mrs McNee were unsuccessful in their appeal against the decision under the LGPS internal dispute resolution procedures.
Mr and Mrs McNee’s position was that their daughter’s wish was for the death grant to be paid to them. They were entitled to this as Ms McNee’s parents and next of kin. They also felt that the process carried out by RBKC and Capita was unclear and lacking in visibility and accountability. They were not contacted as the next of kin and were not given an opportunity to state their case or appeal. RBKC forced the position that the death grant was part of the deceased’s estate, which was incorrect. The death grant was paid in “almost total secrecy”. As a result of these issues, Mr and Mrs McNee suffered stress-related problems.
RBKC believed that the decision to pay the death grant to the individuals named in the grant of probate was correct. This was based on the change in circumstances that had occurred since Ms McNee had nominated her parents. This was indicated by the birth of Ms McNee’s son and her expression of wishes in her will.
Under the LGPS rules, both Ms McNee’s son and her parents would be eligible to receive all or part of the death grant.
The Ombudsman concluded that the decision to pay the death grant to Mr R and the other trustee was within the range of reasonable decisions that they could have reached. However, RBKC was obliged to consider all the relevant matters, including the position of Ms McNee’s parents and should have taken appropriate steps to consider them as potential recipients. The complaint was therefore upheld against RBKC and the decision was remitted to them. The decision was not Capita’s responsibility and therefore the complaint against them was not upheld.
Danny Tsang is a partner of law firm Simmons & Simmons