Mr R was a deferred member of the Simons Group Pension Scheme (the Scheme).
Mr R had received a diagnosis of terminal cancer and had contacted the Scheme administrators in 2016 to discuss his options. The Scheme administrators wrote to Mr R in April 2016 setting out two options for a tax-free lump sum and annual pension, including details of the widow’s pension that would have been payable under each option. It also explained that if Mr R’s life expectancy was less than 12 months, he could be paid his full benefits as a tax-free lump sum.
After Mr R’s death, the new Scheme administrators wrote to his widow Mrs R, with details of her widow’s pension. This was considerably less than the amounts quoted in April 2016 and did not include a tax-free lump sum. Mrs R queried this and was informed that the amounts quoted in the April 2016 letter related to benefits that would have been payable had Mr R brought his pension into payment before he died.
Mrs R complained, that the Scheme’s trustees (the Trustees) had failed to provide adequate information to Mr R during his terminal illness. In particular that benefits payable to his estate (and to her as the widow) would be significantly lower if not taken during Mr R’s lifetime.
The Ombudsman upheld the complaint against the Trustees. He found that the Trustees had not taken account of the information Mr R had provided about his illness. The Trustees failed to follow up on the letter sent to Mr R in April 2016, and did not take adequate measures to ensure Mr R understood the significance of the benefit options outlined in the letter, namely that, any benefits payable after Mr R’s death would be less than those quoted before his death.
The Ombudsman concluded that it was more likely than not that had Mr R been properly informed he, or someone acting on his behalf, would have taken further action, to ensure that his estate and Mrs R received the benefits set out in the letter from the Scheme administrators.
The Ombudsman therefore directed the Trustees to pay Mr R’s estate the benefits that Mr R would have received if he had applied for the higher of the options set out in the letter of April 2016 (including any interest for late payment). The Trustees were also directed to pay Mrs R £500 to recognise the significant distress and inconvenience that she had suffered.