In the case of Mr K (PO–13094), trustees were not held to a "guaranteed" transfer value quotation where a calculation error was discovered before the transfer value was paid, but were ordered to reimburse the member for the £950 fee which he had paid to a financial advisor on the basis that as the transfer value was over £30,000, he would not be permitted to take a transfer value without taking financial advice.


The member was initially quoted a transfer value of £30,485. The accompanying literature gave a period for which the transfer value was guaranteed, but stated that it would not be binding should an error subsequently be discovered. Legislation provides that trustees must not pay a transfer value in excess of £30,000 from a defined benefit to a money purchase scheme unless the member has received independent advice from a financial advisor. The evidence showed that the member had been reluctant to appoint a financial advisor, but had eventually done so on the understanding that it would not otherwise be possible to transfer his benefits. He agreed to pay the adviser a fee of £950. Subsequently (before any transfer had taken place) the scheme administrator informed the member that the transfer value quoted had been incorrect. The correct figure was £25,000.

The Pensions Ombudsman rejected the member's claim that the scheme should pay the transfer value originally quoted, but did order the scheme to pay the member £950 in respect of the financial adviser's fee. Rejecting the argument that the member would have been advised to take financial advice even for a lower transfer value, the Ombudsman found the evidence indicated that the member was reluctant to pay for financial advice and only did so because he believed that the trustees would be unable to pay the transfer value otherwise due to it being over £30,000.

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