The complaint determined by the Pension Ombudsman in Mrs G was that a pension scheme had failed to process a cash equivalent transfer value (CETV) within 12 months of the member's normal retirement date (NRD) of 65. This meant that the member had not been able to transfer her pension benefits to a SIPP, with a view to gaining immediate access to them.

Mrs G had resigned from her local authority employment at the end of 2015 and received a retirement pack from the pension scheme. She requested a CETV statement of entitlement – one of the options in the pack – in February 2016. By then she was very ill and wanted to transfer to a SIPP to give herself maximum flexibility in accessing her pension benefits. In particular, she wanted the cash value of the survivor pension and death grant. But she made no mention of any urgency or that she wanted to transfer to a SIPP. CETV information was issued to her and her IFA firm on 17 March 2016, one day before the cut-off date for her statutory entitlement to a transfer value – 12 months before her NRD.

Unfortunately, she did not actually make a formal transfer request until April 2016. The scheme rules only allowed her to transfer out where she had a statutory right to a transfer, so she could not transfer to the SIPP.

The member's line manager had been aware of her illness and so, even though the member had not told the scheme administrators the reason why she needed to access her funds, nevertheless, she argued, they should have intervened. The Ombudsman disagreed. The scheme was producing a retirement pack, not CETV options, so although a "vigilant administrator" might have picked this up, and it would have been helpful in any case to have included a general warning that CETV rights were lost within 12 months of NRD, omission of the 18 March date in the details of the CETV was not maladministration. Mrs G and the IFA had not made her intentions clear.

Although there had been some maladministration by the scheme in dealing with the request, in terms of lack of communication and miscommunication, and the scheme could have done more to signpost the 18 March date, in any event Mrs G had not suffered actual financial loss as she was in receipt of the correct benefits from the scheme. Her loss was one of expectation – she placed no value on the spouse's pension or death grant that made up a large chunk of the CETV. Whilst fully understanding Mrs G's desire to have full control over her pension assets, her reasons for doing so were personal, not financial.

Comment & Actions

  • The Ombudsman suggested that any blame lay with the employer, commenting that, as her life expectancy was limited, Mrs G should have applied for serious ill-health commutation and that her resignation was "wholly inappropriate for her circumstances". His view was that the scheme would have expedited a CETV request had it been fully aware of her circumstances.
  • If a claim had been made against the employer for failure to advise the member about her ill-health benefit options, it is unclear whether it would have succeeded. Recent claims to the Pensions Ombudsman on similar grounds have not been successful, but this is still something of a grey area.

  • The prohibition on statutory transfers within 12 months of NRD was removed for DC schemes when the flexibilities were introduced. Trustees of DB schemes where the rules do not permit non-statutory transfers might want to flag up to members the fact that it still applies to DB to DC transfers.