The Ombudsman has not upheld a complaint by a member who relied on incorrect information provided by his pension scheme about how much of his lifetime allowance (LTA) he had used (Mr R CAS-42021-V5R7).  The member had started to receive a pension before 6 April 2006 (A-day).  The fact that the member had started to receive his pension before A-day meant that he had not as a matter of law used up any LTA at the point when his pension came into payment.  However, the pension which he had already taken was relevant to calculating how much LTA was available to him in the event of post-A-day benefit crystallisation events (BCE).

Following an initial enquiry by the member's financial adviser, the scheme trustee replied that the member had used 28.07% of his LTA.  Following the subsequent complaint by the member, the trustee acknowledged that this figure was incorrect.  Following a subsequent query by the member's financial adviser, the scheme trustee stated that the member's LTA stood at 70.84%.  The member took this figure to represent the percentage of his LTA remaining.  However, it subsequently emerged that the 70.84% figure was the trustee's estimate of the proportion of LTA which the member would be treated as already having used in the event of a subsequent BCE.  The member complained that had he been given correct information he could have better planned his pension contributions, receiving more in salary and less in pension to avoid incurring a lifetime allowance charge.

The Ombudsman did not uphold the member's complaint.  He noted that it would have been possible for the member's financial adviser to have estimated the proportion of LTA used by the member and that this would have cast doubt on 28.07% being the proportion of LTA notionally already used.  Moreover, the figure of 70.84% quoted by the trustee had not said whether this was for LTA used or remaining.  The financial adviser had "chosen" to interpret the figure as LTA remaining without seeking further clarification.  The scheme trustee had already paid the member £750 in respect of the distress and inconvenience suffered and the Ombudsman found that this adequately recognised the distress and inconvenience he had experienced.

Our thoughts

Although this complaint was not ultimately upheld, it illustrates that unclear or inaccurate information may lead to pension providers having to spend time dealing with member complaints.  Assuming the LTA is fully abolished as announced in the latest Budget, questions relating to the proportion of LTA used by a member may cease to arise in future. 

Jade Murray

Jade Murray

Partner, Pensions
United Kingdom

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