View more on these topics

Standard Life scheme to pay member £20k over transfer delay

File image of a pension savings potTrustees of the Standard Life Staff Pension Scheme must pay a member nearly £20,000 for the investment losses resulting from a delayed transfer.

In the upheld Pensions Ombudsman ruling, Mr L complains he was given misleading information regarding his statutory right to transfer and he lost money.

Mr L is a current employee of Standard Life (that has since merged with Aberdeen Asset Management) and had a deferred defined benefit pension accrued during his employment with the firm.

He was also actively contributing to a work-based defined contribution pension and in late 2016 considered consolidating all his benefits in one place.

To do this he set up a Standard Life Group Flexible Retirement Plan so he could transfer his benefits and also arranged all his future contributions to be paid there.

In late November 2016, as part of this benefit consolidation, the pension scheme administrator Mercer gave Mr L a guaranteed transfer value statement that was guaranteed for three-months. It was due to expire on 24 January 2017.

On 9 February 2017, Mercer confirmed Mr L had returned all the relevant transfer paperwork before the guarantee period expired and explained that the relevant funds would be “disinvested” in due course.

There then followed an extended period during which Mr L chased Mercer for an expected completion date for the transfer, without receiving a satisfactory response.

On 28 July 2017, not content with the perceived delay, Mr L raised a formal complaint under the scheme’s internal dispute resolution procedure.

On 1 August 2017, Mercer emailed Mr L saying: “…as the member is an active member he is not entitled to a statutory transfer and as such the requirement to settle the transfer within 6 months statutory window does not apply…”

The transfer went ahead on 2 August 2017 and the trustees told Mr L in a letter they agreed there was a breach of the six-month statutory right to transfer.

The letter said: “The six months point was reached on 25 April 2017 and the transfer payment was not processed until 1 August 2017….As a result, the DB transfer would require to [be] completed within six months of the initial guarantee date which means an optimum completion date of 25 April 2017.”

The trustees also said if the transfer was not completed in this timeframe the transfer value that was previously guaranteed would need to be revised and enhanced in one of two ways.

Either an extra one per cent could be added to the original DB transfer value or the original DB transfer value could be recalculated.

The trustees acknowledged the transfer was unduly delayed and have undertaken to pay Mr L the minimum level of compensation required by legislation, equal to 1 per cent above the base rate of inflation for the DB section and a notional investment loss calculation for the DC section.

The trustees said they would pay £4,304.65 in interest to Mr L and also offered £500 in compensation for the poor service he had received.

However, Mr L was not satisfied with this response as he felt it did not adequately address his loss of investment returns.

The trustees then offered to pay £443.26 into his new plan and also increased the offer of compensation for the poor service to £750.

Mr L was still not satisfied with the response so he brought his complaint to the Pensions Ombudsman.

Deputy Pensions Ombudsman Karen Johnston notes the trustees have increased their offer of compensation again, to £1,500, and says this is satisfactory.

She also orders the trustees to pay £18,156.04 into Mr L’s Standard Life Group Flexible Retirement Plan within 21 days.

Standard Life Aberdeen was not able to comment.

Mercer has not yet been able to respond to a request for comment.

Recommended

1

New year, new rules for block pension transfers?

The new year often comes with a promise of change and resolution. Many will stop smoking, give up drinking alcohol or go on a health kick. But we should also consider the damaging effects outdated legislation will continue to have on pensions. Pension freedoms brought us freedom and choice but legislation has not caught up […]

3

Carl Lamb: No excuses for sloppy DB transfer systems

Along with all the other firms that provide advice on defined benefit transfers, we received our questionnaire from the FCA about the quantity and nature of cases we have handled since 2015. By the time you read this, the deadline for its return will have passed and those under scrutiny will have breathed a collective […]

DB transfers to top £60bn over next three years

Consultants Mercer estimate nearly one third of a trillion pounds will be paid out from defined benefit schemes between 2019 and 2021. The record amount is due to large numbers of active and deferred members expected to transfer to another arrangement alongside a rapidly growing buy-in and buy-out market. This year has seen a record […]

11

Nic Cicutti: Spectre of DB transfer scandal looms larger than ever before

New FCA findings suggest advisers should prepare for significantly higher FSCS contributions at least Like many adults in the latter half of their lives, my pecuniary affairs are complicated. Not only do I earn a living from multiple employers but my future retirement income is dependent on several sources of funding, which includes three separate […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com