Pension Ombudsman calls for transparent flexibilities

Ian Craig

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The Pensions Ombudsman appears to have adopted a pragmatic and flexible approach in dismissing case PO-5688 regarding delayed settlement of a transfer value payment..

Mr David Brackley, a member of the Travel Automations Systems Retirement Benefits Scheme, complained that Capita (then Bluefin), the Scheme’s administrators, unreasonably delayed the provision of a transfer quotation and the subsequent processing of his request to transfer. While The Occupational Pension Schemes (Transfer Values) (Amendment) Regulations 2008 (SI 2008/1050) may not be this year’s stocking-filler, it offers the statutory timescales to complete a transfer value payment. To recap, trustees must provide the cash equivalent transfer value within three months, and then the member has three months (from a guarantee date) in which to accept. The member is then required to confirm acceptance in writing and the transfer value must be paid within six months of the guarantee date.

In this particular case, the cause of delay was due to Mr Brackley’s benefits being recalculated following a change to the Scheme’s equalisation date, and legal advice being sought on which measure of inflation, RPI or CPI, to apply. While six months is a prolonged period of time, the key point is that if the administrators had not performed these additional steps then inaccurate information would have been issued.

As a result of the delay, due to legislative changes in the intervening period, Mr Brackley could not make a transfer to the intended overseas scheme as it was no longer a ‘qualifying registered overseas pension scheme’. Mr Brackley also stated that the failure to complete the transfer saw a reduction in his transfer value.

Mr Brackley argued that they had no choice but to transfer to a different scheme while following the Scheme’s Internal Dispute Resolution Process and eventually raising a complaint with the Pensions Ombudsman. The complaint was dismissed on the grounds that the delays were justified despite breaching legislative requirements.

The Pensions Ombudsman did, however, find Capita’s practice as maladministration due to their failure in keeping the member updated on the delays. Compensation was not required as the maladministration did not cause the member any injustice.

The key learning from the case is that member data should be as accurate as possible in order to calculate benefits correctly. Should there be any delays in calculations or if the scheme is undergoing a wider rectification exercise, then affected members should be notified and kept updated accordingly. Transparency with members is therefore imperative.

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