Pensions Ombudsman provides useful commentary on unreasonable delay when making a transfer

In this decision (10 pages/648 KB), the PO confirmed that a short delay in processing a transfer request as a result of a change in administrator is not necessarily unreasonable.

The dispute revolved around a pension plan in which Mr N held both defined benefit (DB) and defined contribution (DC) benefits. In March 2021, Mr N requested that his DC benefits be transferred to a self-invested personal pension scheme. Shortly after this, on 6 April 2021, Mr N retired from employment. The plan’s trustee requested that Mr N’s DC benefits be disinvested on the same day and provided final calculations to him via email on 22 April, along with the transfer paperwork.

The completed transfer paperwork was received by the plan on 14 May. This triggered the plan’s due diligence process, and Mr N was emailed with further questions.

Mr N’s financial adviser requested an update from the plan on 26 May and was informed that the transfer could not proceed until Mr N had answered the further questions sent to him. Mr N stated that he had not received these questions, so the questions were resent to Mr N on 28 May, and he responded on the same day. 

At this time, Mr N was informed that, once the outstanding points were answered, it would take between five and 15 days for the disinvestment to be finalised and for the payment to be made to Mr N’s receiving pension arrangement. He was also informed that the plan’s administrator was changing, and any further communication should be sent to the new administrator. The change of administrator took place on 1 June 2021.

However, on 3 June, Mr N informed the plan’s trustee that the new administrator had told him that his transfer could not yet proceed as the administration transition was still ongoing. This meant that the new administrator did not yet have access to the required systems and files. The trustee responded to Mr N and escalated this matter to the new administrator’s operations manager on 7 June.

On 11 June, the new administrator confirmed that it had received the required information and on 15 June, it actioned the transfer request. As a result, on 17 June the transfer payment was sent to the receiving scheme. However, on 24 June, the receiving scheme told Mr N’s financial adviser that it had not received the payment. Following discussions between the parties, the payment was confirmed on 28 June.  There was a suggestion that the payment reference had been placed in the wrong field and was therefore unavailable to the receiving scheme.

On 5 August, Mr N raised a complaint via the plan’s internal dispute resolution procedure. The complaint was not upheld, the trustee stating that any delays were not excessive.

As a result, Mr N raised a complaint with the PO, stating that the delays were excessive and resulted in a financial loss of £8,689.02. The trustee argued that the plan received the necessary information to action the transfer on 28 May and the transfer payment was made on 17 June, which was within usual service levels and the statutory timescales.

The PO did not uphold Mr N’s complaint. The PO noted that the trustee could only request further information from Mr N to perform the required due diligence after the completed transfer forms were received, as the information required would vary depending on the case - although it may have been best practice for the trustee to notify Mr N at the outset that further information could be required. The PO also did not find that that the trustee should have contacted Mr N to remind him to respond to its questions because the questions had only been with Mr N for eight working days - although the suggestion is that it would be appropriate to follow up after a reasonable period. The correct payment reference had been used by the new administrator and there was nothing to suggest that this should have been included in a different field. The PO also found that the slight delay caused by the transition of administration to the new administrator was not unreasonable and therefore there was no maladministration. 

In a separate complaint (8 pages/657 KB) relating to a pension transfer, Mr T had complained to the PO that his scheme’s administrator had caused significant delays in relation to transferring his pension to another scheme. The PO partially upheld Mr T’s complaint and gave examples where maladministration arising from avoidable delays in the transfer process is likely to be found, including significant delays in providing a cash equivalent transfer value quotation, not responding to a member’s financial adviser within a reasonable timeframe, making unnecessary information requests, and not completing a transfer at the earliest reasonable opportunity.