Scottish Widows has escaped a complaint to the Pensions Ombudsman that the provider unfairly reduced the value of a client’s pension transfer.
The client, referred to as Mrs E, requested a cash equivalent transfer value out of Scottish Widows’ Retirement Benefit Scheme in June 2015, and was quoted a figure of £686,687. In early August, this value had been revised down to £644,226 after a new actuary had been appointed to the scheme.
While there were three distinct warning on the original quotation letter that the value was for “illustration purposes only”, and “therefore not guaranteed”, Mrs E complained that these had been missed by both her and her IFA so were “not prominent enough.”
Though she opted out of the scheme regardless, Mrs E argued that she was treated unfairly compared to deferred members of the scheme who were able to lock in their CETV for three months, and that she was forced to pay for financial advice.
Scottish Widows offered Mrs E £500 in compensation for not informing her of the new transfer calculation method sooner, but said there was “no basis upon which Mrs E or her IFA could have assumed the transfer value was guaranteed” so offered no further redress.
This was upheld by an adjudicator but then appealed to the Pensions Ombudsman.
Pensions Ombudsman Anthony Arter agreed with the adjudicator’s decision that “opting out from a final salary scheme is an important decision and it was therefore correct for the trustees to ensure Mrs E had sought financial advice.”
He also agreed that the wording around guarantees was clear enough.
Arter’s decision reads: “The wording could not be clearer in my view. Mrs E recently submitted a copy of the June 2015 CETV statement which clearly states that as she was still a member of the Scheme her transfer value was not guaranteed.”
He adds: “There was no statutory requirement for the Trustees to place a three month guarantee on Mrs E’s CETV because she was not a deferred member, so this has nothing to do with acting fairly or not.”
He added that did “seem to be excessive” that Mrs E took a month to find an IFA when considering her pension transfer.