The Pensions Ombudsman has upheld a complaint against trustees who, at a time when they were receiving a particularly high volume of member enquiries, failed to act on a member's request to reissue a cash equivalent transfer value quotation in time for the member to act on it (Mr N PO-21990).
Mr N was a member of the British Steel Pension Scheme. On 30 August 2017 he requested a cash equivalent transfer value (CETV) quotation. He subsequently chased for it on 29 September and 16 October of the same year. On 7 November the scheme administrator wrote to Mr N providing a CETV quotation of £26,635.33, guaranteed for three months from the date of issue. However, Mr N did not receive the letter. On 4 January 2018, Mr N tried several times to telephone the administrator, but the line was engaged. That same day he wrote to the administrator to say that he had not received a CETV quotation. On 1 February, Mr N attempted to telephone the administrator, but was again unable to get through. He sent an e-mail to the administrator explaining that he had not received his CETV quotation and needed this information in order to decide whether to transfer out of the Scheme. Mr N tried again on 9 February to telephone the administrator, but again could not get through. Consequently he raised a customer service complaint and explained that he had not received a CETV quotation despite having chased for it on several occasions. On 14 February 2018, the administrator confirmed that Mr N had been sent a CETV quotation on 7 November. It said that the expiry date (7 February 2018) had now passed and that, in line with his statutory entitlement, only one CETV quotation would be issued in any 12 month period.
From October 2017, the Scheme had begun its "Time to Choose" exercise in which members were asked whether they would like to transfer to a new scheme or remain in the Scheme and enter the Pension Protection Fund. In April 2018, Mr N transferred his benefits to the new scheme. As a result, he had the right to request a CETV from the new scheme which he duly did, following which he transferred out of the scheme. The CETV was £24,568.22, so £2067.11 less than the CETV quotation provided in November 2017. Mr N consequently made a complaint against the Scheme trustee.
In response to the complaint, the Trustee said that it had issued the CETV to the correct address within statutory timescales and that the Trustee could not be responsible for the post once it had left its office. It accepted that there were delays in responding to Mr N's concerns, but said that this was as a result of the extremely high volume of member queries during this period.
The Ombudsman upheld Mr N's complaint. He accepted that there had been no maladministration in the provision of the original CETV. The Ombudsman agreed that the Trustee could not be held responsible for any failings in the postal system. However, he held that there was maladministration in the handling of Mr N's request for an update. Mr N had chased the CETV quotation on two separate occasions in writing before the expiry date.
The Trustee had sought to argue that there "cannot be maladministration for the Trustee to fail to provide a document to a member, in circumstances where the Trustee has no legal duty to provide that document to the member in the first place", but the Ombudsman disagreed. He held that by failing to respond to a request for a copy of the CETV quotation within a reasonable timeframe, the Trustee failed to comply with its duty to act in the best interests of beneficiaries. The Ombudsman also disagreed with the Trustee's argument that it was not at fault for failing to respond to the request because it experienced an unprecedented level of member interaction during its "Time to Choose" exercise and had brought in as much additional administrative resource as it was able to. The Ombudsman said that the maladministration involved a failure to reissue a CETV. As reissuing a letter did not require specialist skills, it should have been within the Trustee's power to scale up its operations to ensure that this type of request was dealt with promptly.
The Ombudsman ordered the Trustee to contact the scheme which had received Mr N's transfer value and ask it to calculate the notional current fund value on the basis that the original transfer value had been paid on 7 February 2018. If this value was greater than the actual fund value, the Trustee should pay the difference into the receiving scheme. He also ordered the Trustee to pay Mr N £500 for the distress he had experienced.
This case illustrates how a failure to act promptly on a straightforward request from a member can escalate into an Ombudsman complaint, and that where the member makes a simple request such as asking for a copy of correspondence already issued, the Ombudsman will expect a scheme to comply even where the member cannot point to a specific legal duty to do so. It also shows that the Ombudsman will expect trustees to allocate sufficient administrative resources to deal with routine member requests even when a particular exercise is leading to much higher levels of member correspondence than usual.