Pensions disputes: Check member records thoroughly when complaints made

The dispute arose after a man, referred to as ‘Mr Y’ complained (11 pages / 2.08MB PDF) that his pension provider sent him conflicting information about the value of his benefits following his request for a cash equivalent (CETV) illustration. He also complained about a poor investment return after his benefits reached the Guaranteed Minimum Pension (GMP) target, such that he will not receive 5% increases on his pension in payment. He complained that changes to the presentation of annual reports from the provider made identifying these issues and making comparisons more difficult.

In July 1986, Mr Y transferred his occupational pension scheme benefits, worth a total of £6,489.41, to the provider’s policy. His selected retirement age for the policy was 63. In 2013, Mr Y received a letter from the provider who informed him that he may not have sufficient funds to be able to claim his retirement benefits before the age of 65.

In 2017, the provider sent Mr Y an anniversary certificate stating that they were unable to declare any bonuses to his policy that year and that he would only be able to take or transfer his fund if there was sufficient value to provide the GMP at age 65. An illustration of his benefits in August 2018 showed a CETV of £82,023.71. The provider stated that the £120,603 cost of securing the GMP was greater than the CETV and Mr Y would therefore not be able to transfer his benefits.

The PO did not uphold the complaint, finding no maladministration by the provider in respect of the benefit options offered to Mr Y at his selected retirement age. There was no legal requirement for the provider to apply increases to GMPs accrued before April 1988. The provider was entitled to make commercial decisions not to award bonuses and Mr Y had been on notice that bonuses may not always be added to his policy. 

The PO had issued a preliminary decision partially upholding the complaint on the basis that the provider had wrongly addressed a 2013 letter, which was not received by Mr Y. However, the provider subsequently produced a copy of this letter which was correctly addressed. This changed the PO’s decision and he found that the provider could not be held responsible for the member not receiving the letter. 

The PO also explains the relevance of previous determinations to current investigations and confirms that, whilst he has regard for previous Ombudsman decisions, each case is determined on its own facts. In this instance, the member referred to a previous case where the same provider did not allow an individual to claim benefits at age 60 because the policy value was insufficient to cover the GMP. The Ombudsman considered this was different from the current complaint, as Mr Y complained about the provider not allocating bonuses nor applying increases.

The member had complained that changes to the presentation of annual reports from the provider made identifying these issues and making comparisons more difficult. Interestingly, the PO did not engage with this element of the complaint, although the case adjudicator stated that the provider was entitled to amend the way it presented documentation sent to policyholders. If members found information difficult to understand, it was open to them to contact the provider and seek clarification or to request information in a different format.