Mmc Uk Additional Benefits Scheme · CAS-48593-D1L0

CAS-48593-D1L0

Ombudsman’s Determination Applicant Mr N

Scheme MMC UK Additional Benefits Scheme (the ABS)

Respondent Marsh McLennan Companies UK Limited (Marsh)

Complaint Summary Mr N has complained that:-

1) Marsh has made deductions from his UK executive pension payable from the ABS over and above what it was permitted to make. He accepts a deduction equivalent to the aggregate of his ‘registered’ and ‘supplementary’ Canadian pensions is permitted, but an additional sum equivalent to the Canadian pension purchased with excess contributions, may not be deducted.

2) Marsh has taken undue time to respond to his queries in settling his overall pension provision.

Mr N is seeking a Determination as to whether Marsh is entitled to deduct pension from the ABS benefits equivalent in value to the Excess Contributions Canadian Pension (as defined below), and if it is not so entitled, the following remedies:

1) for his benefits in the ABS to be paid on the basis that the Excess Contributions Canadian Pension is not deductible; and

2) to receive back-payments for the deductions that have historically been made by Marsh.

Mr N is also seeking interest, legal costs and an award for non-financial injustice for the time taken by Marsh to settle his pension provision.

Summary of the Ombudsman’s Determination and reasons I uphold the complaint in part because Marsh was not permitted to make deductions equivalent to the Excess Contributions Canadian Pension from Mr N’s benefits in the ABS. These deductions also amount to maladministration causing significant non-financial

1 Please enter the content IF your condition is NOT met injustice to Mr N. However, I do not find that Marsh took an unreasonable length of time to respond to his enquiries nor that Mr N is entitled to the reimbursement of his legal costs.

Detailed Determination Material facts

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Marsh wrote to Mr N on 28 August 2023 to explain this and Mr N responded by email on 24

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Summary of Mr N’s position

23. When the Compromise Agreement was negotiated Mr N took specific specialist advice. He did not want his UK benefits to be reduced and paid in part from the Canadian Plan mid-way through his retirement, but acquiesced to Marsh’s arrangement on the basis it was clear exactly what deduction could be made.

24. Marsh is attempting to modify the Compromise Agreement after the fact to “wrap in” the Excess Contributions that he and his advisers were completely unaware of at the time the Compromise Agreement was signed.

25. The Excess Contributions and Excess Contributions Canadian Pension have arisen because the contributions that he made to the Canadian Plan were significantly more than is actuarially needed to purchase the Basic Canadian Pension. Under Canadian pension law he is entitled to get the value of the Excess Contributions in some way.

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27. The Compromise Agreement states that his UK benefits will be reduced by an explicit monetary amount once the Canadian Plan benefits come into payment. Marsh has breached this written contract by deducting a substantially larger amount from the UK benefits than permitted.

28. As a result of Marsh’s position, he has had to postpone drawing his Canadian Plan benefits, causing him financial loss.

Summary of Marsh’s position

29. Marsh is entitled to deduct an amount equivalent to Mr N’s total Canadian Plan benefits, including an amount equivalent to the Excess Contributions Canadian Pension from his ABS entitlement.

30. The Compromise Agreement states the Bowring Plan figures in elements A and B are inclusive of (that is, reduced by) element C (see paragraph 10 above). The description of element C says that the figures in A and B are “inclusive of your registered and supplemental Company Canadian pension benefits of a total of C$44,423”.

31. It does not agree with Mr N’s interpretation that this wording excludes the Excess Contributions Canadian Pension. Clause C is intended to capture all of the Canadian Plan benefits which would include both the Basic Canadian Pension and Excess Contributions Canadian Pension (whatever their amount).

32. The C$44,423 is the calculation of the total Canadian Plan benefits, at the time of the Compromise Agreement, which did not include an estimate of the Excess Contributions Canadian Pension because the end of service calculation described above could not have been determined at that time. This calculation had no impact on the overall benefit payable.

33. Not only was the Compromise Agreement unambiguous on this point, the letters in April and August 1992 (the 1992 Letters) further demonstrate the legal basis for this position. The 1992 Letters both had contractual effect. Both say that the ABS will include “all company service from your original hire date in Canada, with a reduction for the benefit you will receive from the Canadian Plan”. No distinction was made

6 Please enter the content IF your condition is NOT met between the Basic Canadian Pension and the Excess Contributions Canadian Pension – the reduction is in respect of all of the Canadian Plan benefits.

34. The 1992 Letters set out the member’s entitlement, which is reflected in the wording of the Compromise Agreement. That entitlement was to have backdated pensionable service credited in the ABS so as to include the period of pensionable service that had already been accrued in the Canadian Plan, with the amount payable from the ABS to be reduced by the pension payable from the Canadian Plan.

35. While it is unfortunate that an estimate of the Excess Contributions and Excess Contributions Canadian Pension was not included in the Compromise Agreement, this is not a case of over-stated or under-stated benefits that affect a member’s overall entitlement. Whatever the value of the benefits in the Canadian Plan, they are included in what is subtracted from the ABS. This avoids a duplication of benefits received for similar periods of service, which would constitute a windfall for Mr N (at Marsh’s expense).

Conclusions

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1 Section 91 Pensions Act 1995 which prohibits the surrender of any right to a future pension under an

occupational pension scheme and renders ineffective any agreement for such surrender. This does not apply to a bona fide compromise of a genuine dispute, there must be a genuine dispute in respect of the pension right (see HR Trustees Ltd v German [2010] EWCA Civ 1349).

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2 See Barnardo’s v Buckinghamshire and others [2018] UKSC 55 3 [2021] EWCA Civ 867

12 Please enter the content IF your condition is NOT met The intent to provide additional benefit in respect of service with an associated employer (Marsh Canada by treating it as completed with Bowring and to “enhance” his pension in respect of such previous service; the reference to the benefit to be received from the “Canadian plan” should be read accordingly as referencing the benefit earned in respect of “company service” and “company service” should be read as service with Marsh Canada.

13 Please enter the content IF your condition is NOT met The parties have provided information on the excess contribution provisions under the Canadian Plan. Essentially, it appears that if a member has participated in a defined benefit arrangement under the Canadian Plan that required them to pay contributions and the value of their contributions with interest exceeds 50% of the value of their pension tested at retirement or on other life events, the excess is treated as excess contributions. Excess contributions may be refunded or used to provide additional pension or taken as a lump sum subject to various conditions. Excess contributions are broadly treated the same way as voluntary contributions. I note the explanation provided by Marsh in a letter to Mr N dated 13 March 2020 that, in Quebec, the default for the payment of excess contributions is to purchase additional benefits from the Canadian Plan as set out in a requirement which Marsh quotes as:

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As such, I find that the words “the benefit you will receive from the Canadian plan” in the August 1992 Letter should be interpreted as referring only to the benefit Mr N is to receive from the Canadian Plan in respect of his service with Marsh Canada in the period from July 1977 to May 1992 to the exclusion of any additional benefit whether arising from any other employment, transfer, voluntary contributions or excess contributions and anything not earned from his service with Marsh Canada in that period.

I note that this is consistent with the figures provided in the Compromise Agreement even though, as already noted, it appears that neither party was aware of Mr N’s Excess Contributions Canadian Pension at the time.

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Directions

For the avoidance of doubt, the manner in which Mr N’s benefits were put into payment, including the date of payment and back-dating (see paragraph 88) and the adjustment for a ‘joint and survivor’ pension, shall not be revisited or retrospectively amended for these purposes.

Camilla Barry

Deputy Pensions Ombudsman 19 December 2025

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