The Pensions Ombudsman has ruled in favour of Scottish Widows after a complaint was made against them involving a delay to a pension fund transfer, which resulted in a financial loss of £1,466.33.

The complainant, known as Mr D, wanted compensation of £2,366.33, which included his financial loss and the time and money spent on phone calls, estimated by him at £900.

Mr D had been due to reach his normal retirement date on 19 August 2015, and Scottish Widows had issued two ‘wake up’ packs in March and June of that year suggesting that he independent financial advice and directing him to the Scottish Widows website.

However, Mr D did not contact Scottish Weeks until 11 August 2015, requesting a 25 per cent tax free lump sum on his chosen retirement date of 19 August 2015, with the remainder going into a flexible drawdown plan. At the time, Scottish Widows informed him that the new policy could not be set up immediately as it would need to be done by a different team.

A new telephone appointment was scheduled for 18 August 2015, and Scottish Widows confirmed that Mr D would not be penalised because of the wait and the new policy would be set up at the new appointment. He was informed that the value of the policy at 10 August 2015 was £36,863.59 but was subject to change as it continued to remain invested.

At the appointment on 18 August 2015, Mr D was informed of his options and told to refer to the investment guide about the new funds. Scottish Widows told Mr D they were unable to offer him advice about which fund to choose. They also highlighted with Mr D a ‘parking fund’, which was available as a temporary investment if Mr D needed time to decide which fund to choose. It was explained that in this particular fund, his assets would not rise or fall in value. Mr D did not opt to go into this fund, and instead said he would review the funds, with a telephone appointment arranged for 24 August 2015. It was made clear to Mr D that the new policy was not yet set up and could be done in the next appointment.

On 24 August 2015, Scottish Widows rang Mr D who confirmed his fund choices. The remaining transfer requirements were completed and the new policy was set up. Time scales were provided for completion of the transfer and the payment of the tax free cash. At the end of the call it was confirmed again that his existing policy was still invested and the value could go up or down from the estimates provided which would affect the final value.

On 25 August 2015, the transfer was completed and on 27 August 2015 a letter of confirmation was issued to Mr D, showing the final amount transferred of £35,397.01, being the value disinvested on 25 August 2015.

However, Mr D complained to Scottish Widows regarding the drop in fund value quoted compared to the fund value transferred. Scottish Widows response, confirms that the value transferred, was the value of the funds at the time that all the requirements had been met to allow the transfer to be completed. The drop in value was caused by a downturn in the financial market. Scottish Widows refused to honour the retirement date of 19 August 2015, as they state that Mr D requested time to review the fund choices available to him.

The complaint was considered by an adjudicator at the Pensions Ombudsman, who concluded that no further action was required by Scottish Widows. They ruled that it was unreasonable for Mr D to request that the higher amount be honoured as Mr D was informed both in telephone calls and correspondence that the final figures may differ as the policy would remain invested until the new policy was set up and the funds were transferred. Scottish Widows made it clear that the value was not guaranteed and that it would change in line with investment performance. Based on the adjudicator’s comments the Pensions Ombudsman decided to not uphold the case.

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