Department of Health v Pensions Ombudsman and Moss 1

United Kingdom

Reference: (1997) OPLR 385

The member was an NHS doctor who retired in 1989 at age 60. The provisions of the NHS scheme provided for a deduction to be applied to the member's pension when he reached age 65 to reflect state pension benefits. The question arose whether the deduction should be applied to the pension the member was originally entitled to at age 60 (with subsequent indexation increases recalculated on the basis of the new figure) or the pension (including indexation) he was receiving at age 65.

The Ombudsman found in the member's favour on the basis that he was unable to find any statutory basis for the recalculation of the indexation on the member’s benefits prior to his 65th birthday.

In upholding the Ombudsman's determination, the Court held that indexation was a cumulative benefit akin to compound interest. Although past increases were expressed as percentages of a sum which subsequently required adjustment, they had been translated into specific sums of money paid to the member. To recalculate past increases in the way argued would need to be justified by clear words which were absent here.