Lost opportunity to receive deferred DB pension benefits

Marcon

Tommyjw said:

Marcon said:

Tommyjw said:

Marcon said:

Tommyjw said:

Marcon said:

Tommyjw said:

Whilst i do sympathise, not least for all the ill health problems, there is unfortunately little that can be done.

Defined Contributions Schemes have a requirement to write to members atleast 4 months prior to their retirement date (target retirement/normal retirement age), and so there would be more of a cuase to question/complain why more effort was not done to check letters had been received even if not returned as wrong address for example.

For Defined Benefit Schemes, no such requirement is in place. There is best practice, and at my company for DB Schemes all members will get a letter ~6months before, and if we hear no reply we chase, and eventually attempt to trace them if we hear nothing back. But this is just good practice, not a requirement. 

The address issue itself is likely the employers fault, the administrator would only hold data given by the employer and must trust that. But as above, best practice would have been for them to check it and attempt traces regardless when nothing ever came back from the address they had. It is ultimately expected a member would keep track and update Schemes with address details, and for example query if he never got a statement on leaving the company (if that all went to this same wrong address)

Even if you could prove the absolute worse administration of the Scheme with no letters gone out, no tracing attempts made etc, ultimately as above the correct benefits are being paid, it would not be for the company or the Trustee to assume the member would have retired from the plan (rather than e.g. decide to leave it and benefit from Late Retirement increases added on), assume what option he picked, and retroactively pay those benefits, ultimately the only thing to be done now is to pay the spouse as they have done.

You're assuming the scheme has a late retirement option at all, never mind one which can be passively triggered (ie by the member failing to respond at the point of retirement), when there's no evidence either way on that point.

Whether the administrator or the employer is at fault in respect of the address doesn't alter the fact that the member is not at fault and should not be penalised.

Given the health issues, there'd be no reason for the individual not to start drawing their benefits - and opting for late retirement would make no sense (whereas overlooking the old scheme completely, given the timing of events, is entirely credible).

There's also a likelihood that there are GMP benefits, given the age of the scheme/member, which can't lightly be disposed of...

There's another possibility that, had the correct address been used, the member could have commuted all his benefits on grounds of serious ill health (if the scheme offers that option) and taken everything tax free as a lump sum, and a widow's pension would still be payable. 

OP, there's a lot to consider here as you'll see from my answer - some if very technical. It isn't clear that the correct benefits have (and are) being paid, so I'd certainly give it a go - using the scheme's own Internal Dispute Resolution Procedure if necessary. There's nothing to lose. MoneyHelper (link in my previous post) will be able to assist in formulating a cogent argument and thus limiting the further distress for the widow.

You're assuming there isn't. I've worked in likely close to 100 DB Schemes and never seen a single one that doesn't increase for late retirement. Ultimately, it makes zero difference.

The member is absolutely at fault. It is the members responsibility to ensure a third party has the correct address. The member knew he had benefits, knew he had a pension, and made zero attempt to receive it, regardless of whether the company should have made more effort, that is the members responsibility to ensure correct address details were had for a pension he knew about .

You are making assumptions what a person may or may not have done. The world doesn't work on assumptions. Benefits cannot be paid on assuming what someone may or may not have done, there is nothing further to be mentioned.

It is incredibly unfair to suggest anything can happen and get hopes up. You can sympathise but also be realistic at the same time. The correct benefits have been paid, absolutely nothing will be changed.

There will be many Ombudsman decisions confirming it is not an absolute responsibility to trace a member, it is good practice, but it is the members ultimate responsibility to ensure the right address is held, and their responsibility to contact the administrator.

I've certainly seen schemes with no late retirement option and it could make a significant difference here. I haven't assumed anything; I've pointed out there is no evidence either way.

How can the member be 'absolutely at fault' where the member has no reason to know that the wrong address is being held? 

It's not about tracing the member - it's about paying benefits in line with the rules of the scheme. You don't normally lose the right to benefits because you don't claim on time, although many schemes have a provision where payment of long-overdue benefits (but not more recent/future benefits) becomes discretionary if the delay becomes rather too lengthy!

We don't have enough information to know what those rules say, hence the wisdom of suggesting that OP investigates. That's not raising false hopes; it's sensible.

When you leave a company, you get a leaver statement, you will also have access to pension scheme booklets etc which advise of this. If one was not received, you would look into it. If you know a pension exists but have never had any correspondance , you would look into it. It is a members responsibility.

https://www.pensions-ombudsman.org.uk/decision/2022/cas-31576-b1g1/rothesay-life-pension-plan-cas-31576-b1g1 

"It was Mr H’s responsibility to notify the Trustee/Administrator when his contact 

details changed and when he wished to retire." 

I don't understand what you mean by lost benefits. They have not lost benefits , they have been paid a spouse pension in accordance with the death in deferment section of the rules of the Scheme because the member died before taking his pension. What they are entitled to, has been paid, in accordance with the rules, there's nothing further to be looked at.

In an ideal world... In this case, the member didn't change his contact details and not tell the scheme; the scheme had completely wrong details, which the Ombudsman generally regards (or did during my many years as a volunteer adviser for TPAS) as maladministration.

With respect, we do not know what the rules of this particular scheme say. That's what needs to be checked. No point going on arguing here - up to OP to pursue or not, as they see fit.

Ye , nah. There is absolutely no maladministration for a pension scheme being given the wrong address by the employer and the member in question never having questioned at all during employment, upon leaving, or any point after. 

We do know what the rules say, because the spouse has been paid a pension, therefore the rules have been actioned. It's a simple matter of fact.

May not have been the employer who gave the wrong address. Could have been another member with a similar name and the administrators updated the wrong record. Unless the member was expecting some sort of correspondence (and most don't especially from a scheme they left decades ago), why would they query the information held by the administrators?

But that's not the main issue: clarifying the rules is what really matters. You may be right, you may be wrong; no way of knowing from what's on this thread. I prefer to be thorough in such matters and go back to the source documents (ie the scheme's own rules). Whatever the outcome, at least then the lady concerned can be absolutely sure things have been fully checked and (even if disappointed), what has happened is what should have happened.

The spouse has been paid a pension, but we don't know what the rules say about a member who dies in deferment after reaching their normal retirement age. 

OP - I'd be asking for a copy of the relevant section of the Trust Deed & Rules (which is why you might like MoneyHelper to give you a hand interpreting it) in relation to this particular point. I've seen more than one scheme get it wrong, so simply being assured that 'the rules have been actioned' doesn't mean they have been correctly actioned! If you'd like a draft letter to send the scheme, drop me a PM and I'll suggest some wording. No point continuing the squabbling here!

Bruce1472

Marcon - PM sent

Marcon

Bruce1472 said:

Marcon - PM sent

Thank you. Have PM'd you a reply..

Marcon

OP - have just resent PM as requested.

Marcon

OP - have done as you requested yesterday.

If you're having trouble with PM notifications, have you checked your settings? See https://www.moneysavingexpert.com/site/forum-introduction-guide/?_ga=2.28349308.1131081923.1688684307-1317812496.1608996972&_gl=1*1cifhib*_ga*MTMxNzgxMjQ5Ni4xNjA4OTk2OTcy*_ga_X74CWQS9F0*MTY4ODg5MzAxMy41MTEuMS4xNjg4ODk0MDI1LjEuMC4w and scroll down to 'How to change your notification settings'

Marcon

Tommyjw said:

Marcon said:

Tommyjw said:

Whilst i do sympathise, not least for all the ill health problems, there is unfortunately little that can be done.

Defined Contributions Schemes have a requirement to write to members atleast 4 months prior to their retirement date (target retirement/normal retirement age), and so there would be more of a cuase to question/complain why more effort was not done to check letters had been received even if not returned as wrong address for example.

For Defined Benefit Schemes, no such requirement is in place. There is best practice, and at my company for DB Schemes all members will get a letter ~6months before, and if we hear no reply we chase, and eventually attempt to trace them if we hear nothing back. But this is just good practice, not a requirement. 

The address issue itself is likely the employers fault, the administrator would only hold data given by the employer and must trust that. But as above, best practice would have been for them to check it and attempt traces regardless when nothing ever came back from the address they had. It is ultimately expected a member would keep track and update Schemes with address details, and for example query if he never got a statement on leaving the company (if that all went to this same wrong address)

Even if you could prove the absolute worse administration of the Scheme with no letters gone out, no tracing attempts made etc, ultimately as above the correct benefits are being paid, it would not be for the company or the Trustee to assume the member would have retired from the plan (rather than e.g. decide to leave it and benefit from Late Retirement increases added on), assume what option he picked, and retroactively pay those benefits, ultimately the only thing to be done now is to pay the spouse as they have done.

You're assuming the scheme has a late retirement option at all, never mind one which can be passively triggered (ie by the member failing to respond at the point of retirement), when there's no evidence either way on that point.

Whether the administrator or the employer is at fault in respect of the address doesn't alter the fact that the member is not at fault and should not be penalised.

Given the health issues, there'd be no reason for the individual not to start drawing their benefits - and opting for late retirement would make no sense (whereas overlooking the old scheme completely, given the timing of events, is entirely credible).

There's also a likelihood that there are GMP benefits, given the age of the scheme/member, which can't lightly be disposed of...

There's another possibility that, had the correct address been used, the member could have commuted all his benefits on grounds of serious ill health (if the scheme offers that option) and taken everything tax free as a lump sum, and a widow's pension would still be payable. 

OP, there's a lot to consider here as you'll see from my answer - some if very technical. It isn't clear that the correct benefits have (and are) being paid, so I'd certainly give it a go - using the scheme's own Internal Dispute Resolution Procedure if necessary. There's nothing to lose. MoneyHelper (link in my previous post) will be able to assist in formulating a cogent argument and thus limiting the further distress for the widow.

You're assuming there isn't. I've worked in likely close to 100 DB Schemes and never seen a single one that doesn't increase for late retirement. 

Here's more evidence such schemes are more common than you seem to think: https://forums.moneysavingexpert.com/discussion/6466362/late-retirement-factors#latest

So important that people check the rules of their own scheme and don't just rely on posts here.

r6mile

For Civil Service pensions, I think neither the final salary classic or premium schemes increase if you retire later than 60. The career average ones - Nuvos and Alpha - do however (after 65 and SPA respectively).

Tommyjw

Marcon said:

Tommyjw said:

Marcon said:

Tommyjw said:

Whilst i do sympathise, not least for all the ill health problems, there is unfortunately little that can be done.

Defined Contributions Schemes have a requirement to write to members atleast 4 months prior to their retirement date (target retirement/normal retirement age), and so there would be more of a cuase to question/complain why more effort was not done to check letters had been received even if not returned as wrong address for example.

For Defined Benefit Schemes, no such requirement is in place. There is best practice, and at my company for DB Schemes all members will get a letter ~6months before, and if we hear no reply we chase, and eventually attempt to trace them if we hear nothing back. But this is just good practice, not a requirement. 

The address issue itself is likely the employers fault, the administrator would only hold data given by the employer and must trust that. But as above, best practice would have been for them to check it and attempt traces regardless when nothing ever came back from the address they had. It is ultimately expected a member would keep track and update Schemes with address details, and for example query if he never got a statement on leaving the company (if that all went to this same wrong address)

Even if you could prove the absolute worse administration of the Scheme with no letters gone out, no tracing attempts made etc, ultimately as above the correct benefits are being paid, it would not be for the company or the Trustee to assume the member would have retired from the plan (rather than e.g. decide to leave it and benefit from Late Retirement increases added on), assume what option he picked, and retroactively pay those benefits, ultimately the only thing to be done now is to pay the spouse as they have done.

You're assuming the scheme has a late retirement option at all, never mind one which can be passively triggered (ie by the member failing to respond at the point of retirement), when there's no evidence either way on that point.

Whether the administrator or the employer is at fault in respect of the address doesn't alter the fact that the member is not at fault and should not be penalised.

Given the health issues, there'd be no reason for the individual not to start drawing their benefits - and opting for late retirement would make no sense (whereas overlooking the old scheme completely, given the timing of events, is entirely credible).

There's also a likelihood that there are GMP benefits, given the age of the scheme/member, which can't lightly be disposed of...

There's another possibility that, had the correct address been used, the member could have commuted all his benefits on grounds of serious ill health (if the scheme offers that option) and taken everything tax free as a lump sum, and a widow's pension would still be payable. 

OP, there's a lot to consider here as you'll see from my answer - some if very technical. It isn't clear that the correct benefits have (and are) being paid, so I'd certainly give it a go - using the scheme's own Internal Dispute Resolution Procedure if necessary. There's nothing to lose. MoneyHelper (link in my previous post) will be able to assist in formulating a cogent argument and thus limiting the further distress for the widow.

You're assuming there isn't. I've worked in likely close to 100 DB Schemes and never seen a single one that doesn't increase for late retirement. 

Here's more evidence such schemes are more common than you seem to think: https://forums.moneysavingexpert.com/discussion/6466362/late-retirement-factors#latest

So important that people check the rules of their own scheme and don't just rely on posts here.

Weird comment given I've already commented what is likely the case on that very thread, which is common, that a Scheme allows unsecured early retirement from an age before NRA, so then unreduced ER age to NRA they simply receive inflationary increases, and only after the NRA do they get a late factor. 

Commonly, age 65 NRA , allowance to retire unreduced at 60 , but 60 isn't the true NRA, 65 is, so you only get late increase after 65

Bruce1472

Apologies to followers of this thread for not updating progress in resolving the original above mentioned issue and thanks to a forum member for recently prompting me to provide this somewhat belated feedback.

 

The issue with the late husband’s pension provider originally came to light in November 2022 when the widow received an initial letter from the pension scheme’s administrators informing her of being awarded a widow’s pension. There then followed a protracted period of correspondence with each of the scheme administrator, the employer and the scheme trustees. It took such a long time because it appeared to be almost deliberate on the part of the other parties to delay their responses and provide inaccurate or incomplete information (possibly due to a lack of understanding on their part of how their scheme operated??).

 

The matter was finally concluded in March 2024.

 

I am pleased to report a partial success in securing a significant four figure lump sum payment from the pension scheme in addition to the ongoing aforementioned widow’s pension. Below I summarise key points of interest in securing the outcome.

 

Throughout we maintained our initial belief that the scheme’s decision to award only a widow’s pension was not correct.

 

Under the scheme, the late husband was entitled to receive a retirement pension upon reaching Normal Retirement Age. The administrators insisted that he was not entitled because he had not requested the commencement of monthly payments in response to the pre-retirement reminder letter (that had been sent to a wholly incorrect correspondence address).

 

The administrators were reluctant or incapable to provide adequate responses to queries about the status of the late husband’s pension fund so the employer was approached for assistance. At this point we decided to focus on future correspondence to be with the employer’s pension manager.

 

A full copy of the pension scheme’s deeds and rules were obtained. This was a complex and multifaceted document due to the employer's acquisition over the years of other businesses, each with their own legacy pension schemes. It was essential to read and fully understand that document so that we could formulate reasoned arguments in support of our claim for the payment of pension due under the scheme.

 

We finally received some clarity as to the status of the pension fund from the employer. It transpired that there would only have been an entitlement limited to a retained Guaranteed Minimum Pension. But the employer still insisted that this was not payable as it had not been requested by the late husband on reaching his NRA.

 

When we asked the employer about the gross error in the administrator’s documentation regarding the correspondence address data, they admitted that they had no record of when or how the incorrect data were recorded. There had been a number of scheme administrators during the life of the pension, there was no audit trail available regarding the amendment to the address and therefore this failing was the scheme’s responsibility, which they ultimately accepted.

 

Having read the particular scheme rules we came to the conclusion that there was no provision in them that would restrict due GMP payments to be made only upon written application being made to the scheme. This point was eventually agreed by the employer after consultation with the trustees.

 

So we’d eventually secured an agreement that the pensioner was entitled to receive payment of his GMP from his Normal Retirement Date until his death some 9 months later.

 

Within the scheme there was also provision for a 5 Year Guarantee in the event of early death after retirement. The employer stated that this did not apply when only GMP was concerned. Our interpretation of the scheme rules was to the contrary. After following the scheme’s Internal Dispute Resolution Procedure they confirmed, in their view, that their interpretation was the correct one. If we were to pursue this element further then we would have to take our case to the Pensions Ombudsman. Upon enquiring with that organisation about the Early Resolution service we were informed of the following typical timescales prevalent at that time:

Time to acknowledge receipt of case application for adjudication: 4 weeks

Time for the case to be initially assessed and put on the list for adjudicator allocation: 3 months

Typical current average time for adjudicator to reach a decision, once allocated: 8 months

 

In effect that could be up to another 12 months before adjudication would be forthcoming. As it had already taken about 18 months to reach this point, the elderly widow decided that, although we believed that we had a strong case concerning the 5 Year Guarantee that needed to be tested by the ombudsman, she was not prepared to go through the process of pursuing the case any further.

 

So in the final analysis we had been able to secure the following:

-          A significant four figure lump sum for the pensioner’s GMP payments arrears that should have been paid from his NRD until his death

-          Interest at Bank of England Base Rate + 1% calculated for the period from his NRD until agreement of final settlement

-          £500 in compensation for the distress and inconvenience caused by the administrator's poor performance

 

The main lessons learnt from our experience and of posting this case on the forum, which may be transferable to others in a similar position, are to trust and follow through on your own initial instincts, obtain as much detailed background information as possible about your situation and take on board but don’t always follow suggested advice posted on an open public forum.

 

Finally, I would like to thank one particular forum member who has provided us with much background moral support whilst we’ve been pursuing our case. He / she will know who they are!

Marcon

(Removed by Forum Team)

(Removed by Forum Team)

OP - you clearly did a fantastic job for this lady and I can only congratulate you.