(2 min read)
What happens when an individual believes she is a member of a pension scheme, the scheme administrator believes the member transferred out, the alleged receiving scheme has no record of the member, and the available evidence is limited and contradictory? We take a look at a recent Pensions Ombudsman case where this scenario arose, and consider what we can learn from the Ombudsman’s decision.
The Deputy Pensions Ombudsman (DPO) has held that a scheme retained liability for providing benefits to a member who the scheme trustees believed had transferred out in 1992. The determination provides a useful indication of the Ombudsman’s likely approach when it is unclear whether a member has transferred out or not (CAS-13126-Z0N2).
It was not disputed that the member, Mrs R, had been a member of the occupational pension scheme (the Scheme) from 1972 to 1990. However, there was conflicting evidence as to whether Mrs R had subsequently transferred her benefits out to another scheme. Key points were:
- Mrs R was clear that she had not consented to or requested a transfer out of the Scheme;
- on 24 January 1991 Mrs R had received a cash equivalent transfer value (CETV) illustration from the scheme showing her scheme benefits valued at £5,287;
- on 2 September 1992 the Scheme’s trustee recorded a ledger entry saying that Mrs R’s pension benefits had been paid to a personal pension scheme called the Liberty Life Personal Retirement Plan (the Liberty Plan), the transfer value being £6,181;
- According to HMRC’s contracting-out records, Mrs R had three periods of membership in the scheme: 6 April 1978 to 6 February 1981, 6 April 1983 to 31 December 1984 and 6 April 1986 to 5 April 1990. HMRC’s records said that Mrs R’s benefits in respect of her first and second periods of membership had been transferred to the Lincoln National Personal Retirement Income Plan (the Lincoln Plan), the scheme which had assumed responsibility for benefits in the Liberty Plan following a corporate transaction. A GMP reconciliation project carried out by the Scheme in the period 2016 to 2019 had not found that the Scheme had any liability to pay Mrs R a pension;
- the Scheme’s rules at the relevant time did not allow partial transfers;
- the Sun Life company which subsequently acquired the Lincoln National scheme found no evidence that Mrs R was ever a member of any scheme under its management;
- Mrs R said that she had never received any communication from Liberty Life, Lincoln National or Sun Life.
Ombudsman’s conclusion
The DPO concluded that on the balance of probabilities, Mrs R’s pension benefits were not transferred out of the Scheme. She said that:
- there was no evidence that Mrs R requested a transfer out;
- the ledger entry saying that Mrs R’s benefits had been transferred was made well outside the window within which Mrs R would have had a right to take a statutory cash equivalent transfer value;
- the information provided by the Scheme’s trustee and HMRC contained discrepancies which “[undermined] the likelihood that a transfer was properly made”.
The DPO ordered the Scheme to provide benefits in respect of Mrs R, calculated by reference to the 1991 CETV.
Our thoughts
This determination suggests that where a member can establish that he/she was a member of a particular pension scheme at a point in time, but there is conflicting and incomplete information as to whether a transfer out ever occurred, the Ombudsman may be inclined to find that the original scheme remains liable for the benefits in the absence of consistent and compelling evidence of a transfer.
