Death benefits – The case study of Mrs S
Mrs S’ husband, Sgt S, was a member of the Armed Forces Pension Scheme 2005. In 2013, before being deployed to Iraq, Sgt S was advised to complete a death benefit lump sum nomination form. At the time Sgt S completed the form, he was single and he listed his friend as the sole beneficiary.
In April 2015, Sgt S was automatically transferred to the Armed Forces Pension Scheme 2015 (the Scheme). Sgt S married Mrs S in August 2016 and in October 2016, he updated his details, naming his wife as the beneficiary of his will. Later that month Sgt S died in a road traffic accident.
Veterans UK told Mrs S that although she was Sgt S’ widow and he had made her the beneficiary of his will; he had not updated his death benefit nomination form since 2013 and that nomination remained valid. Therefore, Veterans UK could not pay the death benefit lump sum to anyone other than the nominee on the form.
Mrs S was unhappy with this decision.
One of our adjudicators said that there was no maladministration by Veterans UK who are bound by the Regulations of the Scheme. Regulations 78 and 84 of the Armed Forces Pension Regulations 2014 make it clear that the death benefits need to be paid to the person nominated on the form; and payment may be paid to a spouse only if no one else is nominated. The Adjudicator did not consider that the Regulations allowed the scheme manager to use its discretion to overlook the nomination form and pay the death benefits to an alternative individual.
The Adjudicator acknowledged that Sgt S had updated his will making Mrs S his sole beneficiary. However, that alone was not sufficient to make the nomination form invalid. Regulation 84 of the 2014 Regulations, provides details of when a nomination is invalidated and an updated will was not one of the reasons.
Mrs S did not accept the Adjudicator’s Opinion. She said that the failure to update the nomination form resulted from system failures and from Sgt S’ actions. Mrs S asserted that Veterans UK owed a duty to Sgt S to inform him of the importance of updating the nomination form. Therefore, Veterans UK should have used its discretion and disregarded the nomination form.
The Ombudsman sympathised with Mrs S’ situation but found that the Regulations did not allow Veterans UK to disregard a valid nomination form, despite the unfortunate circumstances of this case. The Ombudsman acknowledged that Veterans UK had a duty to look after its members and their dependants. However, he considered that Veterans UK fulfilled that duty by offering its members a pension and the opportunity to leave a death benefit to their chosen beneficiary.
Related case studies
The case involved complaints made by members and the current trustee of the pension schemes, Dalriada Trustees Limited (Dalriada).
On joining her new employer and being automatically enrolled into a pension plan, Ms N realised that her former employer should have also automatically enrolled her into a pension plan.