DB pension transferred, now they want some money back

jamesd

Ask them this set of questions:

1. Please confirm that if I transfer the whole amount back, not including any gains, you'll reinstate the original defined benefit pension, putting me back into the position I would have been without the mistake being made, bar the investment gain.

2. If my pension today still existed in defined benefit form, what is the current CETV?

3. Assuming 2 is higher than the value including growth now, are you proposing to:
a. pay me the extra money?
b. have me reinstate the DB pension, request a new CETV then transfer out again?

They screwed up quite badly and in the course of restoring your position back to DB they may realise that if they do this you could transfer out again, but with more money. Don't let them off the hook, this is a real possibility.

marlot

Great questions from JamesD.
I wouldn't be going to the meeting without an adviser, or at least someone you trust to take notes.
And do not agree to anything at the time.

GeordieGeorge

Tread carefully. Don’t agree to anything, don’t sign anything, and don’t say anything until you have all of the facts and have taken on some proper, professional advice.

I agree with others that this is absolutely extraordinary, and my layman’s view would be that they offered you an amount of money to exchange your DB pension for, you accepted it, and so they can’t change the deal afterwards. If it turns out that the exchange isn’t valid then you should have the option of returning to the situation that you were in previously, rather than having to return some of your pot.

Good luck, and please do keep us informed as to what happens, it’s a fascinating case.

LHW99

Does the adviser who dealt with your transfer report have any comments?

Marcon

Albermarle said:

I have no advice for you other than to say that the nature of CETV calculation is not something that the average person would be able to validate

Plus as far as I know , each scheme will calculate the CETV differently , making it even more impossible to be able to detect whether a mistake has been made.

Agree, but there are other ways a CETV can be quite clearly wrong, even to a naive eye - the most obvious being things like start date/exit date being much earlier/later than was actually the case; DOB being wrong; or salary being much higher than actual earnings. CETV quotes almost invariably caution the member to check the data on which the quote was based.

sandsy

Similar example in this article (p1):
https://www.ftadviser.com/pensions/2018/09/20/how-to-help-clients-repay-when-the-clawback-request-comes/?page=1

TVAS

The point is this you made a decision to transfer based on the figures provided. It is reasonable to assume that it was checked before it was sent to you. Somebody made a point about a third party administrator so did you deal with the scheme direct or via the third party administrator they appointed to run the scheme on your behalf. 

The IFA is not responsible because his skill is advice not CETV calculation.

You have a strong case because said adviser will have done a Transfer Analysis to calculate the growth rate required for the DC scheme to match the scheme benefits from the DB scheme. The amount of the transfer value is absolutely KEY. So if you give the money back the whole premise of the transfer is undermined. I think you will have a very good case with Pension Ombudsman Service (POS). However the answer is the WHOLE transfer needs to be returned reinstating your membership of within the scheme or no money is returned.  

Col349

Thanks for comments, very helpful 
As I say, the problem seems to stem from an input to the DB pension quite a few years ago and how that was calculated.
Im planning on recording conversation if possible
Adviser said he hadn't heard of anything like this before and says he cannot check calcs as he doesn't have the permissions (?) or knowledge? not sure now but he can't do it.
Will let you know how thing go

LHW99

If it goes to the Ombudsman, could be worth asking him to confirm that in writing, and that his advice was dependent on the CETV value supplied?

ex-pat_scot

a couple of thoughts.

1. it would be helpful to perhaps understand the quantums involved here, to help size this. IT is a fascinating case study, but clearly the stakes could be materially different between a £5,000 error and a £250,000 error. The time period is also quite important, as TVs have moved significantly upwards in recent years.
2. the trustees have an obligation to request the correction of any errors identified, so that the scheme is not weakened. (separate point entirely on whether this is reasonable, equitable etc or if they expect it to be corrected)
3. your advisor will have a duty of care to confirm the figures provided, to process them against your circumstances, and to recommend an outcome based on the results of the calculation. The advisor will not have access to all the underlying calculation factors, methodology, tools and approach used by the scheme actuary in calculating the proposed TV. (such information would include scheme deficit and any downward adjustment made, member age profile, assumptions on tenure, entitlement etc, sponsor funding plans and shortfalls, risk factors etc). Thus in practice they would confirm the figures presented to them, in terms of entitlement, current value, projected retirement at scheme retirement date etc.
4. as others have noted, they ought to put you back to the situation you would have been in before you took the decision made on incorrect data. That would mean full reinstatement of your entitlement plus any indexation to today.
5. you have a very strong argument that, had they provided the correct information, you would not have chosen to transfer. Indeed, you could (but in my opinion ought not to have to ) commission your advisor to re-run their work with the updated numbers and compare the results. However this (a) would cost you time and money and (b) your outlook, risk appetite, family circumstances etc will not be the same now as it was then, when you should have been making the decision.  This would strengthen your case for full reinstatement into the scheme on original terms.  (added bonus - get a full refund of advisor fees and any costs incurred as a result of the original transfer). (added bonus 2- as it is their error, any growth since the transfer cannot reasonably be requested from you, as the money would have been invested by them in near risk free (ie return free) assets). The benefit of that is that (in general) TVs have become greatly more valuable recently owing to long term crash in interest rates and gilt yields, so it they reinstated you into the scheme, then you could transfer out with a fresh and higher TV.

6. You are unusually in the driving seat here. You should take your time, and bring any support you require to any discussion. Don't be afraid to ask for more information, or clarification. Take full notes, and/or record the conversations.   You should not incur any loss (or bear any greater risk) as a result of their error. As noted above and by others, the resolution is far from clear, and the starting principle should be to ensure that you bear no loss or risk as a result of the error, meaning that if necessary they should offer to reinstate you to the pre-transfer position.

Please keep us posted!