Pension disputes: cooperation key to successful resolution

The decisions also highlighted the importance of information to managing pensions and settling disputes, with the provision of documentary evidence a key element of two cases in September 2021.

Parties to be proactive in dispute resolution

Ruling in a case brought by a member over the administration of her self-administered personal pension (SIPP) (CAS-39297-R2V2), the PO made it clear it expects parties to take a proactive approach to resolving a pensions dispute.

Mrs D complained that the administrator incorrectly deducted fees from her SIPP before she transferred her benefits another SIPP, and that if the fees had not been deducted, the SIPP would have achieved more investment growth. Mrs D complained that the redress offered by the administrator was insufficient.

The administrator discovered the mistake two years after the transfer, and told Mrs D it would repay the deducted fees plus base rate interest. The SIPP provider said this was an appropriate way of calculating redress where it was not otherwise known what the investment returns would have been.

The administrator said it would consider paying further compensation if Mrs D provided evidence of a more accurate investment return, and offered her £100 in compensation.

The PO said the provider should have worked with the administrator to establish the loss and rectify its error, and ordered the administrator to calculate the additional growth in the SIPP and pay any shortfall.

The PO said it expected the administrator and the provider to be proactive in obtaining the information needed to calculate a reasonable level of redress. It was not reasonable for the administrator to rely solely on Mrs D to provide evidence which it could have obtained from the SIPP provider.

By the same token, the PO also expects members to be proactive when they pursue a complaint. In this case, the PO did not accept that Mrs D had been caused six years of stress because the matter remained unresolved. She could have been more proactive if she was experiencing significant distress – in particular by providing information and evidence in support of her claims.

As a result, the PO said it was not persuaded that the minimum compensation for non-financial injustice was warranted in this case. Even where a matter would have caused the member distress and inconvenience, this must be “significant” to justify the PO’s minimum £500 award for non-financial injustice.

Administrator not responsible for transfer delays

In another decision relating to a pension transfer (PO-25165), the PO found there were no unreasonable delays by the administrator that resulted in the member being unable to transfer his benefits before a buy-out by an insurer. The administrator was not responsible for fluctuations in the quoted transfer value for the member’s guaranteed minimum pension (GMP) due to the buy-out.

Mr N complained that the administrators of his pension scheme had caused a delay in providing details of his retirement options and transfer value before the insurer buy-out. As a result, he claimed that he suffered a financial loss because the transfer value quoted to him after the buy-out was much less than the transfer value quoted beforehand.

On request, the scheme administrators had provided Mr N’s financial adviser with full details of his pension benefits, including a cash equivalent transfer value (CETV) quotation.

Around this time the scheme was divided, and the trustees were investigating a buy-out of the scheme’s liabilities, which resulted in a freeze on transfers out of the scheme – which began before Mr N’s CETV quotation expired.

Mr N’s GMP benefits were bought out, the trustee having confirmed that Mr N could transfer to another provider after the buy-out. The transfer value quoted by the insurer after the buy-out, however, was approximately £12,000 less than if Mr N had been able to transfer before the buy-out occurred.

The PO decided there were no unreasonable delays by the administrator that resulted in Mr N being unable to transfer his benefits before the transfer freeze or the expiry of his CETV quotation.

Mr N delayed making a decision about whether to transfer his GMP benefits from the scheme because he was waiting for an annuity quotation which could not be issued earlier than six weeks before normal retirement date – and this was not the administrator’s responsibility. The decision to implement a freeze on transfers out of the scheme was made by the scheme trustees and not the administrator, and there was no duty to notify members in advance of this decision.

The PO decision highlights the importance of keeping full records of correspondence with members and their advisers. In this case, Mr N’s adviser disputed that he was informed that a fee would be payable for the CETV quotation, but the administrator was able to provide documentary evidence to the contrary. This evidence enabled the PO to find on the balance of probabilities that the administrator did inform the adviser about the fee.

Co-written by Lorna Khemraz of Pinsent Masons, the law firm behind Out-Law