In the case of Mr D (PO-13219) the Deputy Pensions Ombudsman based her award for investment loss on the member's personal investment practice.


Due to a series of administrative errors, the member's pension commencement lump sum from his defined benefit scheme was paid approximately 8 months late. The member was able to produce documents showing that he had a practice of using large payments received to make investments, generally investing around 90% of any lump sum received. The DPO was satisfied on the balance of probabilities that had the member received his lump sum on time, he would have invested 90% of it, split between and investment account and an ISA. She therefore based her award for late payment of the lump sum on the investment returns that would have been made had the lump sum been invested in this way.

Comment

If a substantial benefit has been paid late, trustees should be aware of the risk that the member may be able to bring a successful financial loss claim for more than just a basic rate of interest if he/she can demonstrate a past investment practice which would have produced significantly higher returns.

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