Discretionary decisions: case 2

Mr and Mrs E were in the process of divorce. Mr E died the day after the decree nisi was made (so the divorce was not final).

The rules of the scheme gave the trustees discretion to decide who lump sum death benefits should be paid to and how they should be divided.

Mrs E received a widow’s pension in accordance with the scheme rules.

The trustees opened some lines of enquiry about Mrs E, but before they had answers they decided not to pay the lump sum death benefit to her but to pay it to someone else.

Mrs E complained that the trustees had not asked her to provide evidence before their decision was taken and said that if they had done so their decision might have been different.

The trustees confirmed that they did not seek further information from Mrs E before making their decision.

They said they had already seen evidence that Mr and Mrs E had agreed a clean break when divorcing.

While there was evidence of Mrs E’s financial dependency on Mr E, the payment of a widow’s pension to Mrs E was a relevant factor in their deliberations.

Mr E had completed a form nominating Mrs E to receive the lump sum, but this was dated from when they were still together. The trustees said they considered this but it was for them to decide how much weight (if any) to give to it.

We found not enough had been done to verify financial information that the trustees had obtained about Mrs E – specifically, the information had not come from her.

There were also lines of enquiry still open. We found that the question of whether the trustees’ decision had been properly made could not be addressed until the open enquiries were completed.

If the trustees had involved Mrs E in the first instance and asked her for information, answers could have been obtained before the division of benefit was decided.

We also found that the trustees may not have asked themselves the right questions about the relevance of the widow’s pension, which was itself not a discretionary award, but the trustees relied on it to exclude Mrs E from the benefit which was payable at their discretion.

We told the trustees to make a new decision about whether Mrs E should receive the benefit.