HSBC Deferred Pension - Won't Pay Beneficiary!

suemacd22

My sister sadly passed away in January, aged 54, therefore before retirement age.  She had a deferred pension with HSBC Bank (UK) from when she was employed by them about 25 years ago. I am  named as her 100% nominated beneficiary on the form submitted to the pension company, and I was due to receive a lump sum of approx £250k upon her death.  However, I have been informed today that the trustees won't pay me as I was her sister and not her spouse or child.  This to me is ludicrous!  Firstly, if she had she been gay, she most probably wouldn't have been married or had children and secondly, if this is the case, why was she not informed of this when she submitted her nominated beneficiary form?  The person I spoke to on the phone said it's up to the trustees who they pay, so obviously have chosen not to pay me!!  Had she have known this would happen, my sister would have cashed her pension in when she found out she only had six months to live but no, she chose to leave the money to me, to help improve mine and my children's lives.  My sister would be absolutely distraught.  I am wondering if it is worth me appealing, perhaps with legal assistance if necessary?  

molerat

You are not a dependant so will not be entitled to a pension but, as the nominated beneficiary, should be entitled to the death benefit laid out in the terms of the scheme but very unlikely that the payout would be anywhere close to £250K.  You need to find the rules for the precise scheme, including the sub scheme,  to which she belonged as some had very restricted payouts..

https://futurefocus.staff.hsbc.co.uk/deferred-dc/landing

https://futurefocus.staff.hsbc.co.uk/deferred-db/landing

Marcon

suemacd22 said:

My sister sadly passed away in January, aged 54, therefore before retirement age.  She had a deferred pension with HSBC Bank (UK) from when she was employed by them about 25 years ago. I am  named as her 100% nominated beneficiary on the form submitted to the pension company, and I was due to receive a lump sum of approx £250k upon her death.  However, I have been informed today that the trustees won't pay me as I was her sister and not her spouse or child.  This to me is ludicrous!  Firstly, if she had she been gay, she most probably wouldn't have been married or had children and secondly, if this is the case, why was she not informed of this when she submitted her nominated beneficiary form?  The person I spoke to on the phone said it's up to the trustees who they pay, so obviously have chosen not to pay me!!  Had she have known this would happen, my sister would have cashed her pension in when she found out she only had six months to live but no, she chose to leave the money to me, to help improve mine and my children's lives.  My sister would be absolutely distraught.  I am wondering if it is worth me appealing, perhaps with legal assistance if necessary?  

I'm sorry to hear you have lost your sister so recently.

Where did you get the figure of £250K from?  As she was employed by them 25 years ago, and was sadly only 54 when she died, she would have been under 30 when she left service, and would only have had a fairly short period of membership of the pension scheme in (presumably) a relatively junior capacity. Even if she'd transferred her benefits out of the scheme to a personal pension arrangement, the transfer value might not have been anything like that figure.

The rules of the scheme won't provide for payment of a pension to anyone other than a spouse/partner/eligible child. The trustees couldn't 'choose' to pay you - you won't be eligible under the rules of the scheme. The form your sister will have submitted can't change that fact. 

If the scheme was non-contributory - and in the 1990s I think it was - there won't even be a return of any personal contributions, because no contributions were made in the first place.

I doubt there are any grounds for an appeal, so please don't get your hopes up, but do have a chat with TPAS for some free, expert and impartial input to help you understand the situation, which must be hugely disappointing at a time when you are also grieving the loss of your sister: https://www.pensionsadvisoryservice.org.uk

dunstonh

Sorry for your loss.

However, I have been informed today that the trustees won't pay me as I was her sister and not her spouse or child.  This to me is ludicrous!

It is not ludicrous.  It is quite normal with defined benefit schemes.  The member gets a package of benefits.  Some benefits may not be as useful as others but its a package.   A bit like paying for a sky tv package doesnt mean you will watch every single channel.

 Firstly, if she had she been gay, she most probably wouldn't have been married or had children 

She could have had a civil partnership though and plenty of gay people have children.

and secondly, if this is the case, why was she not informed of this when she submitted her nominated beneficiary form?

It is in the scheme booklet in the section covering death benefits.   Did she seek advice about the death benefits on the pension or read the scheme booklet before she sent in the form?   The nomination form is usually for the death in service payment.  However, as she ceased to be employed by them many years ago, there is no death in service payment. 

The person I spoke to on the phone said it's up to the trustees who they pay, so obviously have chosen not to pay me!! 

That is the legal position.  However, I suspect this is being taken out of context.   You nominate a beneficiary under the death in service but the ultimate decision is with the trustees.  They don't often overrule but they have the ability to do so if they feel a mistake was made or nomination wasn't updated when it should have been etc.   However, that is for the death in service payment.  Not the pension.

Had she have known this would happen, my sister would have cashed her pension in when she found out she only had six months to live but no, she chose to leave the money to me, to help improve mine and my children's lives

A lot of people who are concerned about the death benefits to transfer their pensions to defined contribution schemes.   

 I am wondering if it is worth me appealing, perhaps with legal assistance if necessary?  

There is nothing to appeal and no breach of law. 

Where have you got this £250,000 figure from?  Deferred defined benefit pensions do not have a value.   As as she was no longer employed by them, there would be no death in service payment.

Defined contribution pensions payout to a nominated beneficiary on death (still subject to trustees) but it's not that type of pension.  

xylophone

She had a deferred pension with HSBC Bank (UK) from when she was employed by them about 25 years ago. 

Assuming this is the relevant scheme guide

 https://futurefocus.staff.hsbc.co.uk/-/media/project/futurefocus/information-centre/deferred-db/guides/midland-member-guide.pdf

If you die with a deferred pension

If you die before age 60 and before you take your benefits, having left employment or opted-out of the Scheme with a deferred pension, the following benefits would be paid:

a pension for your surviving spouse/civil partner. If you leave no surviving spouse/civil partner a discretionary dependant’s pension may be paid;......................

Discretionary dependant’s pension

If you die without leaving a surviving spouse/civil partner, a pension of an amount as set out above may be granted to a dependant, with the approval of the Principal Employer and the Trustee

Discretionary dependant’s pension

If you die without leaving a surviving spouse/civil partner, an allowance may be granted to a dependant, with the approval of the Principal Employer and the Trustee.

If you would like to nominate someone for the Trustee and the Principal Employer to consider, please complete the Nomination of Specified Dependant form; you can find a copy at the back of this guide. Anyone you nominate must qualify as a dependant at the date of your death. The Principal Employer and the Trustee will not be bound by your nomination and, if they decide to pay a dependant’s pension, they will check to ensure the person nominated (or any other person) fits the definition of dependant. 

It would appear that the Trustee does not regard you as a dependant of your late sister.

In the circumstances, a transfer out may indeed have been the best option (or possibly for your sister to have drawn the pension on the basis of ill health/terminal illness which might   have provided her with a lump sum to leave as a bequest).

Marcon

xylophone said:

It would appear that the Trustee does not regard you as a dependant of your late sister.

In the circumstances, a transfer out may indeed have been the best option (or possibly for your sister to have drawn the pension on the basis of ill health/terminal illness which might   have provided her with a lump sum to leave as a bequest).

Given OP's sister only died last month, I doubt the Trustee has had time to consider anything - they certainly wouldn't take a decision just on the basis of a Nomination Form, even if recent. But OP's post shows they clearly believed that a lump sum of £250,000 was due, rather than any sort of pension.

It's just possible that £250K was the sister's transfer value or fully commuted serious ill health pension, although the figure seems pretty high in either case. If that's so, then sadly the fact she did not transfer out or fully commute means she has nothing to leave in terms of her pension. I feel deeply sorry for her surviving sister and am posting this comment only in case it helps someone else.

Thrugelmir

suemacd22 said:

if this is the case, why was she not informed of this when she submitted her nominated beneficiary form?  

The form when received would have been filed immediately. Not the trustees responsibility to provide any guidance or support at the time. The pension scheme booklet provides all the information that's required. Onus is on the member to read the rules.