In the case of Miss A (PO-12332), the Ombudsman has held an expression of wish form to be invalid and taken the unusual step of substituting his own decision for that made by the trustees.
The Ombudsman also ordered the scheme's administrator to pay three beneficiaries £2000 each for the distress and inconvenience caused by its maladministration.
The case carries important lessons, particularly around:
- the importance of ensuring that expression of wish forms are completed properly; and
- the need for robust death benefit decision-making processes that are not overly reliant on expression of wish forms.
The member died in November 2013 while an active member of a small self-administered scheme (SSAS), the rules of which provided for payment of a death benefit held on discretionary trusts. At the time of the scheme's establishment in March 2004, the member had signed an expression of wish form, but not filled in details of his chosen beneficiary himself. The member's brother, also a member trustee of the SSAS, added his own name as nominated beneficiary on the member's form and placed his initials next to his amendment. He gave evidence to the Ombudsman that he would not have amended the form in this way had it not reflected his brother's wishes at the time.
In August 2013, the member had made a will which provided for the residue of his estate to be divided between his three adult daughters in equal shares. It was not clear from the evidence whether the member (wrongly) believed that his pension fund would pass under his will.
Following the member's death, the SSAS trustees, comprising the member's brother, the member's brother's ex-wife and a professional trustee decided to pay the whole of the death benefit to the member's brother in accordance with the expression of wish form. One of the member's daughters, Miss A, complained to the Pensions Ombudsman.
The Ombudsman held that the circumstances of the manner in which the expression of wish was completed and relied upon rendered the expression of wish form invalid and that the trustees should not have relied on it when making their decision. Normally, if the Ombudsman finds that a trustee decision has been improperly made, he directs the trustees to make their decision afresh. However, citing case law, the Ombudsman said that he was entitled to make the decision instead if the trustees had access to all the necessary information and yet reached a perverse decision. In the present case, the Ombudsman noted that the trustees had failed to request other evidence and had instead given maximum weight to an invalid expression of wish form. Having reviewed their decision following representations by Miss A, they had adopted a similarly inappropriate reconsideration process.
In the circumstances, the Ombudsman decided to assess the distribution that a reasonable trustee would make. He ordered the death benefit to be divided equally between the member's brother and the three adult daughters. Although the brother had improperly amended the expression of wish form, the Ombudsman found him to be an otherwise credible witness who had provided help and support to the member over the years.
The Ombudsman ordered the scheme's administrator to pay the member's three daughters £2000 each to compensate them for the "exceptional inconvenience and distress" caused by its maladministration. The Ombudsman was critical of the professional trustee and administrator's processes for dealing with death benefit decisions which, due to costs concerns, did not involve a meeting or even a conference call to discuss the circumstances of the deceased and whether the trustees had all relevant information to enable them to make a decision.