Pensions Ombudsman rejects Standard Life employee’s transfer value complaint

The Pensions Ombudsman has rejected a complaint by a Standard Life employee, which claimed that the organisation mishandled his request for a new cash equivalent transfer value (CETV).

The complainant, referred to as Mr T, was a deferred member of The Standard Life staff pension scheme. In March 2016, he requested a CETV. He was quoted £911,578 in April 2016, which under the scheme rules would be guaranteed for 90 days until July 2016.

A question and answer sheet sent to members in August 2015 outlined that deferred pension scheme members would be able to request at least one free statutory transfer quotation a year under the scheme’s rules with a guarantee period of 90 days.

Near the time of the CETV expiry date, Mr T observed that the transfer value quotations he obtained through the self-service online portal were significantly higher than the original CETV quote. He subsequently decided not to accept the CETV.

It was stated on the online quotations that the amount was not guaranteed and that this figure was for illustrative purposes only.

Although Mr T thought he would accept the original CETV quote, he claimed that the question and answer sheet led him to believe that he would be able to request a new CETV within 12 months of his original request. After the initial quote expired, Mr T went on to request a new CETV in July 2016.

He was informed by the pension trustees that only one CETV would be issued in any 12-month period, as stated in the scheme rules, although further CETVs could be issued on a discretionary basis where¬†events outside of the member’s control required it. The trustees also advised Mr T that they would not settle a transfer based on values that were not guaranteed.

In August 2016, Mr T complained that the trustees’ refusal to settle a transfer based on values that were not guaranteed restricted his ability to transfer out of the scheme to once per 12 months.

The trustees concluded that the information in the question and answer sheet may not have been clear, and could have led members to believe they could obtain a further quote. On 18 October 2016, they offered to accept the original CETV outside of the expiry date if Mr T still wished to transfer.

On 31 October 2016, the scheme complied with a request from Standard Life to offer an additional CETV to deferred members who may not have appreciated the policy of providing one CETV every 12 months. The amnesty stated that members who received a CETV with a calculation date between 1 March 2016 and 30 September 2016 that had not yet expired, could request a new CETV before 30 November 2016. Members who received a CETV calculated after 30 September 2016 were not eligible for the transfer amnesty, as they had been clearly informed of the CETV policy.

Mr T applied for a new CETV in November 2016 and was quoted £1,087,235 in December 2016, guaranteed until February 2017. He accepted this offer.

In January 2017, Mr T complained to the Ombudsman that the second CETV quote was significantly lower than it would have been if he had received a new CETV when he wrote to them ahead of the amnesty. Mr T sought to gain compensation of between £45,000 and £65,000.

A Pensions Ombudsman adjudicator ruled that no further action was required by the trustees. The adjudicator found that the trustees did not act unreasonably by offering to honour the original CETV, that the second CETV was provided within a reasonable timescale, and that there was no evidence to support that Mr T had been financially disadvantaged by the ‘alleged maladministration’. The adjudicator also found that there was no obligation for the trustees to honour online quotations.

Mr T appealed the judgement, and the complaint was escalated to Karen Johnston, deputy pensions ombudsman. She upheld the original adjudicator’s decision.

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She said: “Had Mr T been aware of the correct position, he could either have accepted the original CETV before the expiry date, or waited until he was next entitled to apply for a new CETV. In offering to honour the original CETV beyond the guarantee date, the trustee put right any injustice which may have flowed from the unclear communication.

‚ÄúThe evidence is clear that the CETVs were the only transfer values that were actually guaranteed. Consequently, I do not think it reasonable for Mr T to expect a transfer to be settled on the basis of the figures quoted in illustrations he obtained via the portal. It was not maladministration for the trustees to refuse to do that.‚ÄĚ