Pension trustees have been urged to study in detail the evidence about beneficiaries when making a decision on the distribution of a death benefit.
A recent ombudsman decision in the case of Mrs P v Centrica Pension Scheme (the scheme) resulted in a finding of maladministration against the trustee for failing to address conflicting evidence about potential beneficiaries.
Pension scheme member Mr P married Mrs P, the claimant, in 1971 and they lived together for 31 years and had two daughters. In May 1986, Mr P filled in an expression of wishes form naming his wife as beneficiary of all the benefits payable in the event of his death.
Although Mrs P moved out of their marital home in March 2002, she claimed that Mr P still supported her and that they still had a joint bank account before his death on 18 May 2002.
On Mr P’s death, the trustee gathered information via questionnaires from Mrs P, her two daughters and Mr P’s sister.
The information was collated and reported to the trustee by the secretary to the trustee. The secretary made a recommendation that the lump-sum benefit was paid to the two daughters in equal proportions and this was accepted by the trustee. Mrs P claimed that the trustee’s decision, which resulted in her being cut out of any entitlement, was perverse.
The Deputy Pensions Ombudsman (DPO) agreed that the trustee failed to properly attempt to resolve inconsistencies shown in the evidence obtained, for example, factual inconsistencies around the degree of separation between Mr and Mrs P.
The DPO decided that the trustee should reconsider the distribution of the death benefits and Mrs P was awarded the sum of £250 for her distress and inconvenience.
Arshad Khan, associate solicitor at Sacker & Partners, said the case shows an over-reliance on a summary of information presented to trustees.
“If the [trustees] want to avoid their decisions being challenged in the first place they should try and assess whether there are any conflicting or inconsistent bits of information being supplied at the initial stage.”