In a decision which will be welcomed by all schemes in the light of imminent Budget flexibility changes, the Pensions Ombudsman (PO) has held that the administrator and trustee of a self-invested personal pension (SIPP) had no general obligation under trust law, contract or statute to remind a member who was making income withdrawals under an unsecured pension option that he could draw down further income during a given pension year.
An unsecured pension, now no longer available, was an arrangement under which the member received returns on invested funds rather than a secure pension up to age 75 (later raised to age 77). They were replaced by the drawdown rules under the Finance Act 2004.
The PO dismissed the complaint by a member who said he was not told that he had not taken the maximum permitted income in the 2007/08 pension year before it was too late to do so. The PO held that the respondent had previously given the member all the necessary facts to work this out for himself and the nature of the SIPP trust was such that the respondent could reasonably expect the member to do so without being fed the information. Therefore, the general obligation on a trustee to act in a member's best interests did not extend to reminding him about undrawn income. On the facts, there was no contractual obligation on the respondent to remind the member, nor did the Personal Pension Scheme (Disclosure of Information) Regulations 1987 impose this duty.
Trustees and administrators will welcome this decision. Although the law relating to drawdown pensions has changed since the events relating to this complaint, and is due to change again when current restrictions are removed in April 2015, pension administrators and providers will be pleased that the PO rejected the suggestion there was any general obligation to provide information or guidance in these particular circumstances.