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Pensions Ombudsman awards £10k after provider fails to flag GAR


The Pensions Ombudsman has awarded a pensioner nearly £10,000 after provider Abbey Life and consultant Towers Watson failed to alert her to a guaranteed annuity rate.

Diane Godfrey paid into a company pension scheme, administered by Abbey Life, for two years up to 1980.

She retired in 2004 but according to the Ombudsman was not issued with a retirement pack, which would have alerted her to the existence of a valuable guaranteed annuity rate.

In addition, Towers Watson was also found guilty of maladministration for not asking Abbey Life for a benefits quotation.

Godfrey says if she had known about the guaranteed rate she would have taken it rather than go on the open market to buy an annuity.

As a result she bought an annuity paying £1,938.24 a year when the guaranteed annuity rate would have paid £2,809.72.

The Ombudsman ruled Abbey Life to pay Godfrey £7,603, plus interest, to compensate for the lower income she received between 2004 and 2015.

Godfrey will also receive income from a new annuity to make up the shortfall and £750 from both Abbey Life and Towers Watson for the inconvenience caused.

However, a similar complaint made by Martin Sayer about Abbey Life and Towers Watson was rejected by the Ombudsman.

Sayer said the firms failed to inform him that his policy had a guaranteed annuity rate when he transferred out of the plan in 2002.

But the Ombudsman said the complaint should not be upheld as the respondents were not advising him about a transfer and because there was “no mandatory obligation to disclose information regarding GARs on transfer”.

Ombudsman Anthony Arter adds he is not convinced knowing the existence of a GAR would have meant Sayer would have decided against a transfer.

He says: “He had taken advice from his IFA, and whilst the IFA’s report giving his recommendation is no longer available, there was clearly a good reason for him to transfer.”

He adds: “Given that neither Abbey Life nor Towers Watson were advising Mr Sayer about the transfer of his pension rights, I do not consider it would be fair, just and reasonable to impose such a liability on them.”



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There are 5 comments at the moment, we would love to hear your opinion too.

  1. Mr Sayer should be complaining to the adviser who arranged the transfer, not the provider – that would come under FOS, not TPO, jurisdiction, though.

  2. We have a responsibility to check these things, if I see an old plan I automatically assume that it could have guarantees. The providers do have a lot to answer for, a major life company recently sent their own salesperson to a member wishing to retire, totally ignoring the GARs available, and tried to sell him a conventional annuity including an adviser fee. I later found out that the client was entitled to GARs if there was no adviser fee in the plan, simple, charge him separately.

  3. Trying to establish that an old pension has a GASR is like pulling teeth. The life companies (in my experience) do try quite had to hide from their obligations and make all kinds of daft excuses. Indeed some of the staff that are on the phones have to refer as they have never heard of a GAR.

  4. Agree with Geoff Sharp. It should be part of standard practice for pension switching cases.
    Step 1 – write to ceding plan asking about GARS, any other guarantees (e.g guaranteed growth rates), protected tax free cash amounts.

    Anything less is just putting your head in a noose

  5. Best to always ask about GAR’s.

    That said, perhaps providers should make a point of giving that information.

    At the end of the day, both should be thinking about the customer and what is right for them.

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