The Deputy Pensions Ombudsman (DPO) has upheld a member’s complaint that an employer and scheme trustee failed to provide sufficient information for a member to make an informed decision about whether or not to opt out of the scheme. The member consequently lost the option to take voluntary early retirement on an unreduced pension.

The DPO determined that

  • the information the member had been referred to was “incomplete and inaccurate” and it was not enough that complete information was available from other sources, such as an intranet site; and
  • the member should be reinstated in the scheme as an active member up to the date of her redundancy, after which she should receive an unreduced pension under the scheme's voluntary early retirement rules.


Mrs Perrett was employed by Royal Bank of Scotland (RBS) and was a member of the Royal Bank of Scotland Group Pension Fund (the Scheme). RBS informed her in December 2010, when she was aged 49, that she was at risk of being made redundant.

In March 2011, Mrs Perrett telephoned the Scheme administrator about an offer from RBS to opt out of the Scheme, which she was considering so as to increase her take home pay. The RBS redundancy terms allowed some members to receive an unreduced pension on voluntary early retirement, but Perrett was not reminded of this.

On 15 March 2011 she received a follow-up email from the administrator that directed her to the relevant pension learning modules and stated that:

“It would take about 15 minutes to go through each module, and they would give you all you have asked for plus more so that you can be sure you have thought of everything before making choices.”

The learning modules set out the consequences of accepting to opt out of the Scheme, which included joining another scheme and receiving an additional 15 per cent of her salary in her monthly pay. In relation to active Scheme members, the modules stated:

“If you are over age 55, and you accept voluntary redundancy, you may be able to take your pension before age 60 without it being reduced for early payment.”

They also stated that:

“Some people may have slightly different benefits, such as a different NPA or redundancy terms. If these apply to you, you will have been told separately.”

The “RBS Redundancy and Early Retirement terms and conditions” and the Scheme rules stated that employees aged 50 to 54 who joined the Scheme before 3 June 2003 were eligible for voluntary early retirement and would be offered an immediate unreduced pension. Mrs Perrett, who had not seen either of these documents, decided to opt out of the Scheme and signed the relevant form, which declared that she understood that as a deferred member she would no longer be eligible for “Special early retirement terms if I retire at the request of the Group”. The opt-out was effective from 31 May 2011, some three months before Mrs Perrett's 50th birthday.

In August 2011, Mrs Perrett informed the administrator that she had now discovered that the right to take voluntary early retirement on an unreduced pension was available from age 50 to members such as her who had joined before June 2003. During her subsequent, unsuccessful appeal under the Scheme's internal dispute resolution procedure (IDRP), she said that if she had known this, she would not have opted out of the Scheme as her department was earmarked for closure. Mrs Perrett was made redundant in December 2012.

Mrs Perrett complained to the Ombudsman that she had been provided with inaccurate and misleading information despite the fact that she had – she claimed – explained her circumstances in the March 2011 telephone call. She submitted that she had relied on the information to her financial detriment in opting out of the Scheme in May 2011 and losing the option to take voluntary early retirement on an unreduced Scheme pension from age 50 just three months later.

Among other things, the trustee and RBS submitted that the information in the pension learning modules was not misleading but merely incomplete. RBS's intranet site provided a detailed explanation of the implications of redundancy and early retirement, as did a 2010 newsletter and a business services webpage on redundancy. Further, the letter sent with the opt-out form warned that it was an important decision and that“[i]f you are unsure about your decision, you may wish to take independent financial advice.” A reasonable person would not only have relied on the information in the learning modules, which had put her on notice that special early retirement terms might apply. They also submitted that the decision whether to opt out was primarily financial and, in line with University of Nottingham v Eyett [1999], they had no responsibility to give financial or other advice.


The DPO upheld the complaint.

There was no record of the March 2011 telephone call, but it was clear that Mrs Perrett had asked about the implications of opting out after many years of service and would in all probability have explained her circumstances. Despite this, the follow-up email referred her only to the learning modules, which stated that early payment of pension on accepting voluntary redundancy could take place only after age 55, and did not guide her to any of the other relevant information.

Although the learning modules stated that some people might have different benefits, such as redundancy terms, they also said that she would be told separately if these applied to her, which she was not. Mrs Perrett therefore had no reason to believe that the standard terms did not apply to her.

In addition, the unambiguous statement in the email that the learning modules would “give you all you have asked for plus more so that you can be sure you have thought of everything before making choices” would clearly lead any reasonable person to believe that they required no further information before making a decision. Even if Mrs Perrett knew of the further online source of human resources information for RBS staff, having explicitly been told that the learning modules would give her all she needed to know, it was reasonable for her not to refer to the site. The same applied to the administrator's suggestion that she might seek independent financial advice and to the 2010 newsletter and business services webpage on redundancy.

The reference in the opt-out form to no longer being eligible for “Special early retirement terms if I retire at the request of the Group” was not a wording that appeared elsewhere and would not be immediately construed as relating to redundancy. It was therefore reasonable for Mrs Perrett not to realise that it did.

In relation to the provision of financial advice, the DPO agreed that Mrs Perrett was primarily making a financial decision about whether to opt out or stay in. However, it was not advice, but rather information, that she was seeking in order to weigh up the relative merits of that decision. RBS and the trustee had a “duty of care to ensure that she was provided with accurate information which enabled her to make an informed decision”. Following Scally v Southern Health and Social Services Board [1992], it was not enough to make the information about all the consequences of opting-out available on the intranet or elsewhere without taking reasonable steps to guide the member to that information.

Mrs Perrett had therefore reasonably relied on “incomplete and inaccurate information provided by [the administrator]” and should now be returned to the position she would have been in if she had not opted out of the Scheme. The DPO directed RBS and the trustee to reinstate Mrs Perrett as an active member of the Scheme as from her opt-out date (31 May 2011) and provide her with an unreduced Scheme pension based on service to her redundancy in December 2012 (with any missing contributions to be paid by Mrs Perrett). Pensions payments must be backdated, with interest. RBS and the trustee must agree the apportioning of the costs of this between themselves. Any resulting adjustment to her redundancy payment must be agreed by Mrs Perrett with RBS.


The position of RBS in this case has some similarities with Eyett, where the High Court ruled an employer was not in breach of contract in failing to alert an employee about adverse financial consequences arising from his decision to leave pensionable service immediately after his 60th birthday, when he would have received a higher pension had he continued in service for only a month longer.

However, the DPO was clearly influenced by the decision in Scally and the fact that she found Mrs Perrett had been provided with “incomplete and inaccurate” information in the communications from the administrator. Even if the administrator was not under a positive duty to advise the complainant, it seems it was obliged not to mislead her.

This determination emphasises that employers must be aware that where members are going to take decisions which may not be in their best interests, a high standard applies to the quality of information which must be provided to the member. Administrators may wish to highlight in their records any members to whom special rules apply, so that such members may be warned of the benefits they would be giving up, should they opt to leave their scheme. It is important to consider special categories of member and to ensure that any such members are provided with information of sufficient detail to enable them to make an informed decision.

View the determination.