The Pensions Ombudsman has rejected a complaint by a Standard Life employee regarding the provision of a second cash equivalent transfer value (CETV) within 12 months of a previous request.
The complainant, Mr Y, is a deferred member of the Standard Life staff pension scheme who was considering transferring his deferred benefits away from the scheme. On 29 August 2016, he received a CETV with a transfer value of £99,612.44, which would expire on 14 November 2016 under the pension scheme rules. The cover letter supplied with the CETV stated that Mr Y would not be able to apply for a further guaranteed transfer value until 15 August 2017.
Mr Y acknowledged that the CETV stated that additional CETVs would not be provided for another 12 months, however, he thought this only referred to free valuations.
Mr Y used the self-service online portal on 28 September 2016 to obtain a new quote for his transfer value. The online quote issued an increased estimated value of £114,396.
It was stated on the online quotation that the amount was not guaranteed and that this figure was for illustrative purposes only.
After receiving the online quotation, Mr Y contacted the scheme administrator to request a second CETV.
The scheme administrator advised Mr Y that only one CETV could be issued within any 12-month period, and Mr Y claimed he was informed that this was a new policy that had been implemented in July 2016.
Mr Y began an internal complaints procedure on 11 October 2016, arguing that refusing to allow members to purchase additional CETVs was an unfair restriction. He claimed that the pension scheme trustees were forcing him to accept a CETV below its current value due to a rule change that had not been communicated to members.
On 31 October 2016, the trustees notified deferred members of the pension scheme that they would offer an additional CETV to members who may not have appreciated the policy of providing one CETV every 12 months. The transfer amnesty, which was available to members in receipt of a CETV calculated between 1 March 2016 and 30 September 2016, stated that if a CETV had not yet expired and the member had not begun a transfer, then a second CETV could be requested before 30 November 2016. Mr Y did not request a second CETV under the amnesty arrangement.
The pension scheme trustees responded to Mr Y’s internal complaints on 16 December 2016, advising that the policy of offering one CETV every 12 months was in line with statutory requirements, and that these policy rules were explained in both the scheme booklet and the original CETV documentation. The trustees acknowledged that it is sometimes possible to exercise discretion to provide a second CETV within a 12-month period, however they did not deem a change in gilt yields as a sufficient reason to issue a new CETV.
On 19 December 2016, Mr Y appealed the decision. He argued that if there had been no policy change then there would have been no reason to offer the transfer amnesty. He believed the amnesty was offered as a result of his complaint. Mr Y further contended that he should be provided with a second CETV, calculated to correspond with the online portal’s higher transfer value from September 2016.
In February 2017, the trustees issued their final response to the internal complaint, maintaining the same stance and reiterating the scheme policy.
Mr Y used the online portal to generate an updated quote of his transfer value on 1 March 2017. The value was estimated at £108,089. After receiving this quote, Mr Y complained to the Pensions Ombudsman, claiming that he declined to request a second CETV because his transfer value had reduced and that the trustees should honour the higher estimate from September 2016.
An adjudicator who considered the complaint found that no further action was required by the trustees. The adjudicator concluded that there was no legal obligation for the trustees to exercise discretion to allow a new CETV, and it was considered reasonable that he was offered the option of a new CETV under the transfer amnesty. Furthermore, the adjudicator clarified that quotations provided via the online portal are not guaranteed and do not give rise to an entitlement under pension legislation.
Mr Y did not accept the adjudicator’s opinion so the complaint was subsequently reviewed by Karen Johnston, deputy pensions ombudsman.
The Pensions Ombudsman concurred with the adjudicator’s previous opinion, stating that the trustees corrected any ambiguity around the CETV policy by writing to affected members in October 2016 and issuing the transfer amnesty. The Pensions Ombudsman concluded that this saw the trustees exercising their discretion to offer affected members a second CETV within a 12-month period, and that it was reasonable to treat all members equally.
Johnston said: “I do not agree that the online quotation of £114,396, generated on 28 September 2016, should be honoured. Having adopted the policy of permitting a transfer amnesty the trustees were bound to apply it fairly to all members who wanted to access it. The policy did not provide for backdating of CETVs. The only transfer values that are actually guaranteed are those contained in a statement of entitlement issued by the trustees. There is no basis on which Mr Y is entitled to demand 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.
“Given the circumstances, I am unable to conclude that the trustees’ refusal to allow Mr Y a new CETV, outside the transfer amnesty, was perverse or outside the range of reasonable outcomes that could have been reached. Therefore, I do not uphold Mr Y’s complaint.”