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Standard Life employee loses complaint over pension transfer value

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A Standard Life employee has had a complaint that the provider mishandled his requests for cash equivalent transfer values rejected by The Pensions Ombudsman.

The complainant, referred to as Mr T, was a deferred member of the Standard Life Staff Pension Scheme.

In March 2016, he requested a CETV for his pension rights, and was quoted £911,578.

The scheme’s rules set out in a question and answer sheet to members they were allowed “to request at least one (free) statutory transfer quotation a year” which was guaranteed for 90 days.

While Mr T originally thought he would accept the CETV, he noticed near to the expiry date that the quote he received through Standard Life’s online portal was significantly higher.

After expiry, Mr T was told Standard Life would not honour the higher transfer value because it was not guaranteed, and he complained the rules actually meant he could only transfer out once in any 12 months.

Standard Life offered to accept the original CETV outside of expiry if he still wanted to transfer.

Transfer amnesty

In October, Standard Life clarified its policy to allow members one additional CETV because they may not have fully understood they were only entitled to one every 12 months.

An amnesty was put in place for those with a calculation date between 1 March 2016 and 30 September 2016 that had not yet expired, that they must apply for a new CETV before the end of November 2016 if they wanted one.

Mr T requested his new CETV within that period, and was quoted £1,087,235 in December 2016.

He accepted the offer.

The following month, he complained to TPO, arguing that the second CETV was still much lower than it would have been had the trustees allowed him to update his CETV ahead of the amnesty.

Mr T sought compensation of between £45,000 and £65,000.

“Reasonable timescale”

A TPO adjudicator ruled that the trustees did not have to honour the online valuation.

The adjudicator said: “The second CETV was issued to Mr T within a reasonable timescale. There is no evidence to support that he has been financially disadvantaged as a result of the alleged maladministration.”

Mr T then appealed the judgment, but deputy pensions ombudsman Karen Johnston has now confirmed the adjudicator’s ruling.

She says: “I acknowledge that the wording in the Q&A ought to have been clearer about the policy. I consider it reasonable for Mr T to have relied on the statement and, to have concluded that he would be able to request further CETVs within 12 months.

“On that basis he is entitled to be put back into the position he would have been had the policy then in place been communicated clearly. I conclude that the trustee offered to do that.

“Had Mr T been aware of the correct position, he could either have accepted the original CETV before the expiry date – or waited until he was next entitled to apply for a new CETV. In offering to honour the original CETV beyond the guarantee date, the trustee put right any injustice which may have flowed from the unclear communication.

“Mr T says the online quotations were consistently above £1,087,235 before 6 December 2016 – the guarantee date of the second CETV. Mr T says the illustrations provide a fair valuation of a scheme member’s pension benefits. The evidence is clear that the CETVs were the only transfer values that were actually guaranteed. Consequently, I do not think it reasonable for Mr T to expect a transfer to be settled on the basis of the figures quoted in Illustrations he obtained via the portal. It was not maladministration for the trustees to refuse to do that.”

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Comments

There are 10 comments at the moment, we would love to hear your opinion too.

  1. Mr T requested his new CETV within that period, and was quoted £1,087,235 in December 2016.

    He accepted the offer.How much did he pay in to this pension incredible amount and still complained

  2. I pity the fool

  3. Unfortunately the Standard Life defined benefit scheme adminstrators Mercers, in their wisdom, allow the members to see their estimated non-guaranteed CETV when the members log into their pension account. This can create unrealistic expectations when compared to a guaranteed CETV statement. The scheme is curently in surplus and pays a pretty generous CETV.

  4. Christine Brightwell 12th April 2017 at 12:29 pm

    I wonder if his LTA was protected in any way

    • Christopher Yates 13th April 2017 at 9:30 am

      His LTA would not have been protected as the method for calculating the value of his benefits for LTA would have been 20 X the pension benefit accrued. The CETV for a lot of the large schemes are paying incredible transfer values, sometime well in excess of 40 times the benefit. It is something else you need to take under consideration when advising on OPS transfers.

  5. I hope he takes the judgement well- Mr T used to get very angry in the A Team

  6. Was he an actuary?

  7. Then people query why transfer advice is so costly. Risk premium people

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