Pensions Ombudsman emphasises early communication can pre-empt a dispute

The decision upheld a complaint by a former employee, whose pension account was closed after his employment ended but before his employer’s final pension contribution had been paid.

Mr G was a member of his employer’s group personal pension plan, and was invested in a number of self-select funds. However, on 31 October 2023, he was made redundant.

His former employer was required to pay a final contribution to Mr G’s pension plan following the termination of his employment. Unfortunately, the pension provider, having been notified of the termination of Mr G’s employment, had already closed his pension account and refused to accept this final contribution when the employer tried to pay it a few days later.

In an attempt to resolve the issue, the provider agreed with Mr G’s former employer to set up a new pension account to receive the contribution, which could then be transferred into Mr G’s existing account at his request. The new account was invested in the pension provider’s default arrangement.

Mr G complained to the Pensions Ombudsman that this was a breach of contract and that the investment did not reflect his regular investment choices.

The Ombudsman agreed that an error had been made and ruled that Mr G should be restored to the position he would have been in had the contribution been paid into the self-select funds in which his original pension account was invested. The determination refers to an initial loss assessment, which indicated a loss of £12.61, but this had not been confirmed when the Ombudsman issued his decision.

The Ombudsman did not order further redress beyond requiring the amount of the loss assessment to be paid into Mr G’s pension account. He noted, however, that Mr G had already been offered £750 for distress and inconvenience and that Mr G should contact his former employer if he wished to accept this payment. 

The Ombudsman also remarked that Mr G’s employer should have told Mr G about the issue when it was identified and discussed possible solutions, rather than acting to resolve the matter unilaterally and subsequently referring him to the pension provider for assistance.