Is a Trustee allowed to stop paying a pension?

M_j_t

Today I received a Pension Information Request; the request is very much a demand. The words If the Trustees do not receive this completed form the pension that is being paid may need to stop are included (and are in bold).

This may seem trivial to some, but the letter includes a must be completed by date that is 1 month from the date of the letter.

Sometimes a letter can take a month to arrive in Australia from the UK. This shortened time frame to complete is scary, as should the payments be stopped my guess is that it would involve a great deal of running around to have payments re-instated and the dirt out here does not taste good.

So what is the legality of this threat/demand from what I would thought a party who is duty bound to provide the entitlement(s)?

Juno_Moneta

You don’t describe the information they are asking for - but eg if it’s simply a random compliance check such as confirming your identity it doesn’t seem unreasonable - but they could only stop payments if the lack of information caused a genuine fraud concern - here’s some general guidelines:

A trustee can stop paying a pension in limited and specific circumstances, but they cannot arbitrarily or unreasonably do so, especially if the pension is already in payment.

When a trustee can stop paying a pension:

1. Scheme Rules Allow It     

If the scheme’s trust deed and rules give the trustee discretion to suspend or stop payments (e.g. in the case of fraud, misrepresentation, or serious breach of terms), they may do so. 

2. Insufficient Funds in the Scheme

If the scheme is underfunded and cannot meet its obligations, trustees may need to reduce or suspend payments, usually under the guidance of The Pensions Regulator. This is extremely rare and subject to legal processes (e.g. winding up the scheme). 

3. Death of the Member or Beneficiary 

If the pension is a dependant’s pension or an annuity that ends on death, trustees will stop payment once the person passes away. 

4. Fraud or Misrepresentation

If someone is found to be claiming a pension fraudulently, trustees can stop the payments and potentially recover overpaid amounts. 

5. Court Order or Legal Requirement

For example, in the case of a bankruptcy, divorce, or criminal conviction involving proceeds of crime.

When a trustee cannot stop paying a pension:

Just because they want to

Trustees are legally obligated to act in accordance with the scheme’s rules and in the best interests of beneficiaries.

If the pension is already in payment and the recipient is entitled to it under the scheme rules: Trustees must continue to pay.

To favour one beneficiary over another: Trustees must act impartially and treat members fairly.

If a pension is stopped unfairly: 

You can raise a formal complaint with the scheme administrator or trustees.

Then go to the Pensions Ombudsman (UK) if unresolved.

Legal action may be taken if the trustee has breached fiduciary duties. 

Flugelhorn

You don't say what info they are after but "proof of life" is one of the things they check up, particularly if you are living overseas etc 

M_j_t

Flugelhorn said:

You don't say what info they are after but "proof of life" is one of the things they check up, particularly if you are living overseas etc 

Name, address if changed, contact number dob NI number and details (name, address, occupation, contact number), signature to the details and confirmation they have known the person receiving the pension. I'm aware they check-up (I also believe that I read something about them especially targeting overseas). 


Re 4. Fraud or Misrepresentation

Many thanks for response Juno_Moneta that's very informative.

Nothing in the letter specifically mentioning fraud or misrepresentation. Just "accurate and up to date records".

If they had initiated this a month ago, then as my partner was on leave, the deadline would have been missed. They also have my email and obviously did not use that (I frequently check junk folders).

Will have a good think about this and what, if anything, to do.

Flugelhorn

If you passed away in the UK they would be much more likely to get that info - many people use the tell us once system and hence NI and HMRC know - much harder to get that  info from abroad - email could be in anyone's hands, hence why they want to some written info 

Juno_Moneta

Will have a good think about this and what, if anything, to do.

By “If anything” - you make it sound optional - if it was me it would be a no brainer to provide the basic information requested. I’d have sent the form back same day!

After all - they are ultimately trying to protect your pension by ensuring it never gets paid to the wrong person. 

dunstonh

Is a Trustee allowed to stop paying a pension?

yes

Name, address if changed, contact number dob NI number and details (name, address, occupation, contact number), signature to the details and confirmation they have known the person receiving the pension. I'm aware they check-up (I also believe that I read something about them especially targeting overseas). 

The UK has an electronic deaths register.  So, they are more likely to manually check overseas residents for that reason.

Will have a good think about this and what, if anything, to do.

how about doing what they ask?

p00hsticks

I'm following this with interest as I recently received a similar letter, dated only a week before my monthly pension payment was due and which arrived two days after the pension payment didn't hit my bank...

I understand why they do it but thought the timeframe was far too short - luckily I had funds that I could live on for the month and have received two months payment now that I have returned the form. 

Marcon

M_j_t said:

Today I received a Pension Information Request; the request is very much a demand. The words If the Trustees do not receive this completed form the pension that is being paid may need to stop are included (and are in bold).

Known in the industry as  the famous 'Are you dead?' letter.

M_j_t said:

This may seem trivial to some, but the letter includes a must be completed by date that is 1 month from the date of the letter.

Sometimes a letter can take a month to arrive in Australia from the UK. This shortened time frame to complete is scary, as should the payments be stopped my guess is that it would involve a great deal of running around to have payments re-instated and the dirt out here does not taste good.

A month is the usual timeframe and is fine for virtually all members. Any longer and plenty of them would simply shelve the letter to 'deal with at a later date' - and then forget about it.

If there is no reply to the first letter, it will be followed by at least one reminder before any action is taken to suspend the pension.

M_j_t said:

So what is the legality of this threat/demand from what I would thought a party who is duty bound to provide the entitlement(s)?

There will be a provision in the rules, giving the trustees power to suspend pensions if they request such information but do not receive it.

M_j_t said:

If they had initiated this a month ago, then as my partner was on leave, the deadline would have been missed. They also have my email and obviously did not use that (I frequently check junk folders).

Will have a good think about this and what, if anything, to do.

Er - return the form?

Keep_pedalling

M_j_t said:

Sometimes a letter can take a month to arrive in Australia from the UK. This shortened time frame to complete is scary, as should the payments be stopped my guess is that it would involve a great deal of running around to have payments re-instated and the dirt out here does not taste good.

There are faster letter services.

https://auspost.com.au/sending/delivery-speeds-and-coverage/international-delivery-times

p00hsticks

Marcon said:

A month is the usual timeframe and is fine for virtually all members. Any longer and plenty of them would simply shelve the letter to 'deal with at a later date' - and then forget about it.

If there is no reply to the first letter, it will be followed by at least one reminder before any action is taken to suspend the pension.

AS per above, my recent experience (with a Pension scheme administered by Capita) was of a much tighter timeframe - so tight that the first I was aware of the request was when the pension stopped, with the request form arriving in the post two days later.