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Case law: Employer should provide sufficient information about consequences to employees making pension-related and similar decisions

Employers should avoid giving employees advice on the financial consequences of decisions about their pensions, tax, income protection insurance, and the like, but must give 'salient information' so they can make informed decisions.

Legal Alert

This update was published in Legal Alert - March 2016

Legal Alert is a monthly checklist from Atom Content Marketing highlighting new and pending laws, regulations, codes of practice and rulings that could have an impact on your business.

A police officer left the police service but rejoined shortly afterwards. If she had delayed rejoining until a slightly later date she would have avoided a large tax liability in relation to her pension benefits. She claimed before the Pensions Ombudsman that her employer should have pointed this out before she rejoined.

The Pensions Ombudsman affirmed the rule that employers are not required to advise employees on the financial/tax consequences of decisions they make in relation to, pensions, share schemes, insurance and so on. Employees should take their own independent advice.

However, the Ombudsman said employers were under a duty to provide 'salient information' which would allow employees to make informed decisions if those decisions affected their pensions, tax liabilities or other financial issues.

In this case, the employer had failed to do so and was in breach of its duties. The Ombudsman ordered the employer to compensate the employee for her loss.

Operative date

  • Now

Recommendations

  • Employers should ensure they do not give employees advice on the financial consequences of their work-related decisions on their pensions, tax, income protection insurance etc, but should provide salient information to allow the employee to make informed decisions on such issues.

Case ref: Ms Jane Lott and the Police and Crime Commissioner of South Wales PO-7097

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