Ombudsman upholds decision in Hobbs case

In Hobbs v Lec Refrigeration Retirement Benefits Scheme, the ombudsman determined the trustees were under no duty to redress any apparent unfairness.

The scheme trustees introduced benefit improvements with effect from September 1991. However, pensioners only received an improvement if they had been in retirement for at least a year. Hobbs had retired in August 1991 and so did not benefit.

The scheme wound up in surplus in March, 2005. Hobbs complained the trustees distributed the surplus in 2006 without taking into account the unfairness he had suffered in 1991.

The ombudsman said the trustees did not have to act of any apparent unfairness.

Law firm Pinsent Masons said: "The ombudsman has confirmed the test that applies when trustees exercise a discretion. The test is not fair treatment. Instead, trustees must ask themselves the correct questions, they must not take into account irrelevant or improper factors and their decision must not be perverse, one that no reasonable body of trustees would have reached.

"Trustees may treat different groups of members differently. Although the ombudsman had sympathy for Hobbs and the trustees’ decision in 1991 had been ‘on the margins of rationality’, that decision stood.

"Trustees will welcome the ombudsman’s robust dismissal of a complaint based on the concept of unfairness alone."