Out-Law / Your Daily Need-To-Know

Out-Law Analysis 3 min. read

Pensions Ombudsman decisions offer reassurance around risks of providing online systems


Two recent decisions of the UK Pensions Ombudsman (PO) place the onus on the scheme member to use providers’ online systems correctly and to switch to alternative means of communication when those systems are unavailable.

The decisions provide a helpful reminder that members should check details carefully before submitting online forms, as providers will generally be entitled to act on their instructions without further enquiry.  If in any doubt about their fund information, they should contact their provider by phone or secure message, rather than rely solely on their provider’s online system.

In one case (8 pages / 956 KB), Mr L, a member of a group personal pension (‘the plan’), complained that the plan’s online system often displayed an incorrect fund value due to a server error. He argued that he would have moved his funds to a zero-risk option if he had known that the value of his fund was falling. This was part of a wider complaint.  

Mr L wanted to explore his retirement options at age 55 and ultimately transferred his funds to a drawdown arrangement and took a tax-free lump sum.  

Mr L argued that he should have been contacted by the plan’s administrator before his 55th birthday to inform him that he could take his pension and invite him to discuss his options. He was generally dissatisfied with the service he received and with the length of time it took to receive annuity quotations; he felt that information about other pension options and fund charges was being withheld. He was also provided with incorrect information about his tax-free lump sum.

The administrator acknowledged that there were a number of issues with the service provided and offered £500 compensation.  

The PO considered that this offer was satisfactory and did not uphold Mr L’s complaint that he suffered financial loss due to the server error. The PO observed that Mr L could have obtained an up-to-date fund value by phone or secure message had he wished. While not explicitly stated in the determination, it is implicit that Mr L was aware of the server error and that his fund value might not be accurate.

Mr L argued that he should be refunded the fees charged in respect of the plan between his 55th birthday and the date on which his funds were transferred to cash due to the delays in providing details of those fees. The PO rejected this complaint because, while there were delays in providing Mr L with information about the plan’s charging structure, the member could have found this information on the plan’s website.

The PO also observed that Mr L’s selected retirement date was age 65 and that the administrator is only required to contact a member proactively with their retirement options in advance of their selected retirement date.  

The member was informed that he could invest in a drawdown option, as he ultimately did, and directed to the administrator’s claims team and a third-party annuity provider for further information. Mr L did not contact the claims team for more than two weeks, so the delay in Mr L receiving annuity quotations was not caused by maladministration.  

Mr L was given incorrect information about the amount of tax-free lump sum available, but this information was corrected later the same day. While inconvenient, this did not cause Mr L financial loss and the offer of £500 compensation was adequate.

In a separate complaint (9 pages / 529 KB), Mr R was invested in a defined contribution arrangement. He had moved his funds into cash to guard against a period of market volatility but subsequently decided to transfer them back to a managed fund.  He made this transfer request through his provider’s online system. Five months later, he complained that instead of completing the transfer he had requested, his funds had been transferred from cash fund to cash fund.

The PO did not uphold Mr R’s complaint. He held that Mr R had entered the data during the fund switching process and the evidence confirmed that he had requested a transfer from cash fund to cash fund. The PO noted that Mr R had the opportunity to review the summary page before he submitted the transfer request; Mr R could also have checked that the switch had completed correctly and contacted his provider in the event of uncertainty. 

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