Pensions Ombudsman highlights importance of thorough records of investigations

The PO recently rejected a complaint by a Mr T, who had contacted the PO after  his civil partner’s (‘Mr S’) pension provider decided not to award him any benefits following Mr S’ death. The PO found that the provider had correctly identified potential beneficiaries, including those named in a letter of wishes supplied by Mr S, in accordance with the scheme rules. The provider’s decision, which it had thoroughly documented, had been a reasonable one.

It is increasingly common for providers to have to analyse complex circumstances in relation to death benefit awards. This case highlights the importance of thorough investigation and documentation of reasoning.

Mr S died intestate, and Mr T was the sole beneficiary of his estate. They were living separately at the time of Mr S’ death, and Mr T was not financially dependent on Mr S. Mr S and Mr T had commenced divorce proceedings, having gone as far as to obtain a ‘decree nisi’ – but not a decree absolute or final order – in 2012. They had decided to not to dissolve their civil partnership, and remained together for a further eight years until Mr S’ death.

Shortly before his death, Mr S purported to write a new will – referred to in the PO’s determination as a ‘letter of wishes’ – but this document was not witnessed and did not meet the legal requirements for a valid will. In this letter, Mr S made bequests to several people, but not to Mr T. Previously, Mr S had formally nominated the daughter of a close friend, a Miss E, to receive the death benefits from his pension. He had never nominated Mr T to receive these benefits.

Upon receipt of Mr S’ letter of wishes, which was forwarded to the provider by Mr T’s solicitors, the provider’s death benefits team made “reasonable enquiries” to identify the potential eligible beneficiaries named in the letter and to establish the nature of their relationships to the deceased. This process, which the PO described as “relatively detailed”, took just over 12 months to complete. As Mr T was the sole beneficiary of Mr S’ estate due to Mr S’ intestacy, the provider considered that his financial needs would be adequately provided for. It also found that the letter of wishes superseded Mr S’ earlier formal death benefits nomination.

However, Mr T argued that the provider’s process was “flawed”: in his view, the team had obtained the letter illegally and should have disregarded it on account of Mr S’ mental state when it was written, a few days before Mr S died by suicide. It was also not clear at the time of the provider’s decision that probate of the estate would be granted in Mr T’s favour, although this process had since concluded.

Reviewing the provider’s investigation, the PO found in its favour. He found that all the information considered by the provider was relevant, and that no irrelevant information had been considered. It was then for the provider to decide what weight to attach to the evidence, provided that its decision was, as in this case, a reasonable one.

Mr S’ letter of wishes had been sent to the provider via Mr T’s solicitors, and there was no indication that it had been obtained illegally. It had been Mr T’s solicitors who told the provider that he was Mr S’ sole beneficiary, and this was a relevant factor for the provider to consider. Ultimately, the scheme rules were wide enough for the provider to conclude that those named in the letter of wishes were valid beneficiaries, and to make the payments accordingly.

Mr T was offered a payment of £150 by the provider to compensate him for an error it had made when explaining to Mr T his options following the provider’s final decision. A PO adjudicator found that this payment – awarded after Mr T was told he could “appeal” the provider’s decision rather than make a complaint – was a fair one.