Lost Benefits – The case study of Mrs N

Mrs N had accrued pension benefits under the Transport Friendly Society Pension Scheme. In 1986 she joined the Department of Education and Science and became a member of the Principal Civil Service Pension Scheme (PCSPS).

When Mrs N contacted the Transport Friendly Society Pension Scheme in 2015 to enquire about her pension benefits, she was told these had been transferred to the PCSPS in 1989.

However, a retirement quote issued to her by the PCSPS on 14 April 2015 did not include details of the transferred benefits and MyCSP, the administrators of the PCSPS, said it could find no evidence of the transfer having taken place.

The trustee of the Transport Friendly Society Pension Scheme provided a copy of a letter dated 15 September 1989, addressed to the Department of Education and Science, which said a cheque for £1,859 in full payment of the transfer value for Mrs N was enclosed. A further letter of the same date, addressed to Mrs N, confirmed the payment.

The trustee made enquiries with its bank but was unable to obtain any evidence of the cheque having been cashed due to the passage of time. Further searches by Mrs N, the trustee and MyCSP failed to find any more information or evidence of the transfer having taken place.   Mrs N initially complained to MyCSP. In its response, it said there was no evidence the transfer had been completed. It also pointed out HMRC had confirmed the liability for Mrs N’s benefits was not held with the PCSPS. In view of this, Mrs N extended her complaint to include the trustee of the Transport Friendly Society Pension Scheme.

Mrs N’s complaint was considered by an Adjudicator. The conclusion was that there was no doubt Mrs N was entitled to the benefits she had accrued in the Transport Friendly Society Pension Scheme. The Adjudicator’s view was that the liability remained with that scheme unless the trustee could clearly show, on the balance of probabilities, the deferred benefits were transferred to another pension arrangement.

The Adjudicator said that, whilst the trustee had been able to produce contemporaneous letters confirming a cheque was issued, this was not enough to confirm the transfer was completed. There was no evidence to show the cheque was received or banked and there was no evidence in the form of a signed discharge or other correspondence to show the liability was transferred. Furthermore, HMRC had confirmed that, according to its records, the liability for Mrs N’s pension was not held by PCSPS.

The trustee did not accept the Adjudicator’s Opinion. It said that its pension adviser had been asked to check the scheme records to see if there were any funds unaccounted for, which would suggest that Mrs N’s funds were never transferred out of the Transport Friendly Society Pension Scheme and were still retained. The adviser had informed the trustee that there were no unaccounted-for funds.

The Ombudsman found that the fact the trustee’s pension adviser had been unable to find unaccounted-for funds did not amount to compelling proof that Mrs N’s benefits were transferred when weighed against the other evidence. The Ombudsman concluded that the trustee’s inability to show beyond doubt that the transfer was completed, together with the confirmation from HMRC that there was no record of the liability for Mrs N’s pension resting with the PCSPS meant that, on the balance of probability, the transfer was not completed and that the liability for Mrs N’s pension remained with the Transport Friendly Society Pension Scheme.

He directed that the trustee should reinstate Mrs N to the Transport Friendly Society Pension Scheme with the deferred pension she was entitled to when she left the Scheme, together with any revaluation increase the deferred pension would have attracted to date.  

Related determinations

• Principle Civil Service Pension Scheme (PO-15300)