Legal General Group Uk Senior Pension Scheme · CAS-31669-X8Z4

CAS-31669-X8Z4

Ombudsman’s Determination Applicant Mr Y

Scheme Legal & General Group UK Senior Pension Scheme (the Scheme)

Respondent Trustee of the Legal & General Group UK Senior Pension Scheme (the Trustee)

Outcome

Complaint summary Mr Y has complained that the Trustee reduced his pension when a new Scheme administrator was appointed. He considers that the original pension he accepted should now be paid.

Background information, including submissions from the parties

“If there is any conflict between this Statement and the Scheme Trust Deed and Rules then the Trust Deed and Rules prevail. CAS-31669-X8Z4 …

The Final benefits payable will always be subject to the Trust Deed and Rules of the Scheme…”

“Importantly, if any part of the benefits is dependent on financial conditions at the time benefits are actually payable (such as investment market conditions and annuity rates), it should be recognised that the final benefits could be reduced from those shown. If irrevocable financial decisions are to be made on the basis of this illustration you should seek clarification as to the extent to which the details shown could change.”

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Adjudicator’s Opinion

4 CAS-31669-X8Z4 • Mr Y’s financial loss was not irreversible as he had confirmed he would still be working after he took his retirement benefits.

• Mr Y was receiving the pension benefits he was entitled to under the Scheme, just in different proportions.

• The Adjudicator agreed that Mr Y had been caused significant distress and inconvenience as a result of a loss of expectation but considered that the offer of £500 by the Trustee was reasonable.

Mr Y did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Mr Y provided his further comments which do not change the outcome. Mr Y said:-

• He could see no valid reason why the new Scheme administrator reviewed and then reduced his pension benefits after he had already agreed the figures with the previous Scheme administrator.

• Without the change in the Scheme administrator and the delay in the payment of his pension benefits he would be receiving the pension proposed by the previous Scheme administrator.

• He was a “non-actuarially qualified” person and relied on the figures given by the previous Scheme administrator, as “any reasonable person” would have done.

• Any change in “actuarial interpretation” should have only applied to any future illustrations, not retrospectively to a person that was waiting to have their pension set up. Otherwise the logical extension would be for the new Scheme administrator to review all Scheme member arrangements that were already in payment.

• There is no “factual evidence” that the previous Scheme administrator’s calculations were overstated, or that the new Scheme administrator’s calculations were correct.

• The reference to him continuing to work was misleading as he retired from his main occupation at age 60, and his work was now casual low paid work, to keep himself active rather than for an income.

• He had suffered a financial loss as he is receiving a lower pension than he accepted originally. By reducing his tax-free cash sum and opting for a longer deferment period he had partly mitigated the shortfall in his pension. However, the £500 compensation offer did not cover his financial loss because it did not take account of the delays in him receiving his pension and having to reduce his cash sum by £10,000.

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I agree with the Adjudicator’s Opinion and note the additional points raised by Mr Y.

Ombudsman’s decision

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I do not uphold complaint.

Anthony Arter

Pensions Ombudsman 12 November 2020

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Appendix

Scheme Rules

44. As relevant Rule 7 says:

“…

(d) A pension calculated in accordance with sub-rule (c) of this Rule will be increased for each complete Tax Year throughout the period, if any, between:-

(i) the date on which the Member ceased to be a Member; and

(ii) the earlier of Normal Retirement Date and the date on which his pension

starts and proportionately on a basis determined by the Trustees in respect of any additional complete month in that period (hereinafter called "the Deferred Period") by the Revaluation Factor appropriate to the relevant Tax Year or other period specified.

For the purposes of this sub-rule, "Revaluation Factor" means:-

(1) in respect of pension which has accrued from pensionable service on or

before 1st May 2006, the greater of the percentage increase specified in

orders made under section 148 of the Social Security Administration Act

1992 and the revaluation percentage specified by reference to section 84

of the 1993 Act in respect of each Tax Year, but subject to a maximum in

any Tax Year of five per cent; and

(2) in respect of pension which has accrued from pensionable service on or

after 2nd May 2006, the revaluation percentage specified by reference to

section 84 of the 1993 Act in respect of the whole of the Deferred Period,

but subject to an overall maximum increase of five per cent per annum

compound over that period.

Provided that:-

(A) all increases under this sub-rule will be compound; and

(B) the amount by which the pension is increased will not be less than an amount calculated using the final salary method specified in Schedule 3 to the 1993 Act.

Full- and part-time Contributory Pensionable Service 8 CAS-31669-X8Z4 (e) In the case of a Member or a Deferred Member whose last or only period of Contributory Pensionable Service comprised Service both as a Full-time Employee and as a Part-time Employee, the calculation of his pension will be subject to the following special provisions:-

(i) his Final Pensionable Earnings will be calculated in relation to the

Pensionable Salary actually received by the Member over any relevant

period before 1st January 2009 and the Notional Salary attributable to the

Member over any relevant period on and after 1st January 2009 which, in

either case, is used in calculating his pension. No regard will be taken of

any earlier period during which his Pensionable Salary or Notional Salary,

as described in this paragraph, will have been of a higher or lower amount

…”

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