The complainant in the case was Miss Jeannette Wilson, the daughter of Mr RF Wilson, a scheme member of the Adam Wilson and Sons Ltd Discretionary Pension Scheme (the Scheme). Mr Wilson requested that in the event of his death, his pension death benefits were to be distributed equally between his daughter and three granddaughters. The Trustee of the Scheme was the principal company, Adam Wilson & Sons Ltd (the Company) and the directors of the Company would carry out the Trustee’s responsibilities.
Mr Wilson subsequently decided to vest his pension, taking a tax-free lump sum, half of which he gave to Miss Wilson and the rest divided evenly between his granddaughters. When he died, the Trustee decided to take this imbalance into account. The Trustee was unable to make payment direct to Mr Wilson’s granddaughters as they did not fall within the definition of “Beneficiaries” under the Scheme rules and instead distributed all death benefits to Mr Wilson’s son who assigned the funds to his three daughters.
The DPO found that, as Mr Wilson’s son was a director of the Company and father of the granddaughters, there was a potential conflict of interest. Mr Wilson’s only recorded wish was that Miss Wilson was to receive an equal share of his death benefits. However, the Trustee excluded her on the basis that a significant lifetime payment had already been made to her. In such circumstances, it was even more important that the decision-making process was fully documented. The DPO held that as the Trustee had misdirected itself in taking the lifetime payment into account and as there were no written records to show what factors the Trustee took into consideration in arriving at its decision or that the potential conflict of interest was properly addressed, this amounted to maladministration. The DPO ordered the Trustee pay Miss Wilson a quarter of the death benefits and £250 compensation for distress and inconvenience.
This case is notable as the DPO decided to take responsibility himself for the final decision on how the death benefits should be distributed, rather than referring the issue back to the Trustee to be reconsidered. It highlights the importance for trustees of documenting their decision-making process and also how they have dealt with any conflicts of interest.
View the DPO determination, Microsoft Word Document, 77.5KB