Edf Group Electricity Supply Pension Scheme · CAS-80646-G2G3

CAS-80646-G2G3

Ombudsman’s Determination Applicant Mrs Y

Scheme The EDF Group of the Electricity Supply Pension Scheme (the Scheme)

Respondents Mercer Limited (Mercer)

EDFG Trustee Limited (the Trustee)

Outcome

Complaint summary

Background information, including submissions from the parties The sequence of events is not in dispute, so I have only set out the salient points. I acknowledge there were other exchanges of information between all the parties.

Mr Y was a member of the Scheme, which is a segregated section of the Electricity Supply Pension Scheme, an occupational arrangement for employers operating in the electricity supply industry. At the time, the Scheme was administered by Mercer.

The Scheme is administered in accordance with the EDF Energy Generation and Supply Group Trust Deed and Rules (the Rules). Relevant extracts of rules 20 and 21 are set out in the Appendix.

1 CAS-80646-G2G3 On 30 November 2016, Mr Y took early retirement through the Scheme on the grounds of ill health early retirement (IHER).

On 26 November 2020, Mr Y died.

On 30 November 2020, Mrs Y informed Mercer that her husband, Mr Y, had died.

On 3 December 2020, Mercer sent Mrs Y the necessary declaration forms to complete and return in order to claim any potential death benefits from the Scheme.

On 14 December 2020, Mrs Y completed and returned the declaration forms along with several original documents and utility bills.

On 21 December 2020, Mercer returned Mrs Y’s original documents and said that it would contact her shortly regarding any benefits.

On 8 January 2021, Mrs Y telephoned Mercer for an update on the payment of any death benefits. The Mercer representative informed Mrs Y that they were in the process of calculating the widow’s pension that she was entitled to, which was due to be reviewed on 11 January 2021.

On 14 and 22 January and 5 February 2021, Mrs Y telephoned Mercer for an update on the payment of the widow’s pension. Mercer informed her that the case was with the Trustee to approve the payment. Mrs Y explained that it had been 14 weeks since Mr Y died and that her funds were running out.

On 11 February 2021, Mrs Y sent Mercer a formal complaint which explained that she was unhappy with the amount of time taken to pay the widow’s pension. These delays were also affecting her ability to apply for Probate. Mercer should consider paying her £2,000 in recognition of the distress and upset it was causing her.

On 18 and 22 February 2021, Mrs Y telephoned Mercer as she was still yet to hear anything about the value of her widow’s pension, or when it would be paid.

On 4 March 2021, Mrs Y emailed Mercer and said that she was the sole Executor for the Estate. She understood that Mr Y’s benefits held an entitlement for the remainder of a five-year guaranteed period to be paid as a death benefit lump sum. Mr Y died before the five-year period ended, so she wished to know the value of the death benefit lump sum. She required this information to apply for Probate.

On 5 March 2021, Mercer said:

“I can confirm that we acknowledge your [role] as a sole executor of Mr [Y’s] Estate. I can also confirm that the lump sum payable in respect of the 5-year guaranteed pension is £23,863.20. The distribution of the lump sum death benefit is at the discretion of the Trustees.”

Between March and April 2021, Mrs Y queried the payment of a death benefit lump sum, and was told that the decision remained with the Trustee to exercise its discretion. 2 CAS-80646-G2G3 On 16 March 2021, Mrs Y started to receive her widow’s pension, which was backdated to 26 November 2020.

On 14 April 2021, Mercer informed Mrs Y that it was still awaiting a decision from the Trustee about the distribution of the death benefit lump sum.

On 26 April 2021, Mercer wrote to Mrs Y and offered her £500 in recognition of the distress and inconvenience she suffered due to the delays in paying the widow’s pension. Mrs Y accepted, and was paid the £500.

On 13 May 2021, Mercer emailed Mrs Y and said that the death benefit lump sum was being recalculated and referred back to the Trustee to confirm how it should be distributed.

On 25 May 2021, Mrs Y withdrew £20,000 from a Prudential investment.

On 1 June 2021, the Scheme’s Pension Manager emailed Mrs Y about the death benefits payable under the Scheme. She explained that the matter was referred to the Scheme’s legal counsel who confirmed that there was no death benefit lump sum payable. She said:-

• The Rules provide for the payment of a death benefit lump sum. For a member who took IHER, this was comparable to a death in service lump sum. If a lump sum was payable, it was the total value less the pension commencement lump sum (PCLS) paid to the member, and less the total amount of pension instalments paid to the member.

• Mr Y took IHER in November 2016 and received a PCLS of £143,785.77 and a reduced pension of £21,567.96. Between November 2016 and 26 November 2020, Mr Y received £86,271.84 worth of pension instalments. The total benefit Mr Y received amounted to £230,057.61.

• The death in service lump sum, based on Mr Y’s membership and salary, was £149,368.59. Mrs Y’s unreduced annual pension, not taking into account any reduction, when multiplied by a factor of five, was £108,914.60. This allowed for a total death in service lump sum of £258,283.19.

• The total value of a death in service lump sum was limited, under the Rules, by a factor of 4.5. In Mr Y’s case, this limited the death in service lump sum to £224,052.89. As the value of the benefits already paid to Mr Y exceeded £224,052.89, a death benefit lump sum was not payable.

• It apologised for any distress and inconvenience Mrs Y had experienced due to the provision of any incorrect information and provided her with details of the Scheme’s internal dispute resolution procedure (IDRP).

On 19 July 2021, Mrs Y submitted a complaint under the Scheme’s IDRP and said, in summary:-

3 CAS-80646-G2G3 • Due to the delays in dealing with the payment of her widow’s pension and general communications, Mercer should consider paying an additional £1,000 in recognition of the distress and inconvenience she suffered. This was in addition to the £500 already paid.

• Since she was told about the possibility of a death lump sum payment of £23,863.20, she committed to certain expenditure. Consequently, on 25 May 2021, she was forced to withdraw £20,000 from an investment to cover the expenditure she had planned for based on the £23,863.20 lump sum.

• Her investment held an expected annual return of 5.7%, which equated to a loss of £1,140 for that year. Based on the provision of incorrect information, she was now without an expected sum of £23,863.20, and without an investment return of £1,140. Mercer should pay her £25,003.20 as compensation for its errors.

• She sought advice from a friend who acted as a pension trustee, and her son-in- law who worked as a financial adviser. Mercer should pay her an additional £1,000 in recognition of the time her friend and son-in-law spent in helping her deal with Mercer’s errors and delays.

• She reviewed the Rules, a Scheme booklet and the information that Mr Y had been provided when he made the decision to take IHER. She believed that Mr Y was given incorrect information about the death benefits available under the Scheme. This, in her view, may have affected his decision making at the time he took IHER.

• There was nothing to indicate that if Mr Y took IHER that the death benefits available thereafter would be subject to a different calculation. It also seemed illogical that there was a 4.5 factor cap on the calculation of a death in service lump sum.

• She believed that Mr Y may have reconsidered his options, before taking IHER, if he was provided with sufficient information. He took IHER, so his life expectancy was undoubtably in question. So, the provision of death benefits for his next of kin would likely have played a role in his decision making.

• She reviewed the options available to Mr Y, before he took IHER, and believed that he could have considered two alternatives:

o defer taking his pension until his health declined, this would be in spite of losing the IHER enhancement, though his benefits would have received three more years of increases; or

o transfer his benefits to a personal pension whereby he could assess his benefits through drawdown.

• If Mr Y was provided with full and accurate information about the Scheme death benefits he might have made different decisions. However, it was difficult to

4 CAS-80646-G2G3 quantify what financial loss has occurred due to the information Mr Y was provided.

• She suggested that Mercer should pay her a total of £27,003.20. This covered £2,000 for distress and inconvenience, £23,863.20 for the lump sum she expected, and £1,140 worth of investment loss on the investment she encashed.

On 11 October 2021, the Trustee provided its response to Mrs Y’s IDRP complaint and said, in summary, that:-

• It was accepted that the service she received from Mercer in the setup and payment of her widow’s pension fell short of their normal expectation. It also agreed that on 5 March and 1 June 2021, Mercer managed her expectations poorly in regard to the death benefit lump sum.

• It was regrettable that she was misinformed about the death benefit lump sum. However, it was only able to pay benefits in accordance with the Rules. Furthermore, each time she was informed about the death lump sum, she was also told that its payment was at the discretion of the Trustee. So, it was not a guaranteed benefit.

• The 4.5 Scheme cap for death in service lump sums was not mentioned in the IHER quote sent to Mr Y. However, it is mentioned in the Rules and Scheme booklet that were available at the time. It was not standard practice to issue a cash equivalent transfer value (CETV) unless one was requested.

• It agreed that it was difficult to conclude how an individual would have acted in the past based on different information/circumstances. If Mr Y deferred taking his pension from 2016 until 2019, then, at his death, the remainder of a five-year guarantee would have been payable.

• If Mr Y deferred taking his pension until August 2019, without the IHER enhancement, he would have been offered:

o An annual pension of £21,566.16, with a lump sum of £64,698.41, or a reduced annual pension of £18,871.68 with a maximum lump sum of £125,810.75; and

o under either option, an annual widow’s pension of £12,400.54 was payable.

• The options that Mr Y was offered in November 2016, which included the IHER enhancement, were:

o An annual pension of £23,644.20, with a lump sum of £70,932.60, or a reduced annual pension of £20,484.48 with a maximum lump sum of £136,562.42; and

o under either option, an annual widow’s pension of £14,007.25 was payable.

5 CAS-80646-G2G3 • In 2016, Mr Y took a reduced annual pension of £20,484.48 with a maximum lump sum of £136,562.42. However, an error in the calculation was discovered in 2017, which meant that his annual pension was increased to £21,567.96 and an additional lump sum of £7,223.35 was paid. The option Mr Y took in 2016 provided a far greater level of benefit than if he deferred his benefits until 2019.

• It did not agree that she was entitled to a level of redress equal to the death benefit lump sum which she was expecting (£23,863.20). However, in recognition of the service she received, and the provision of incorrect information, it offered her £1,500.

Mrs Y’s position

She was told on multiple occasions that she was entitled to a death benefit lump sum of £23,863.20. This led her to form the reasonable expectation that she would receive this amount, even if she was told that the amount was at the discretion of the Trustee, as she was Mr Y’s wife and immediate next of kin. There was never any suggestion that the death benefit lump sum may not be payable.

She had already committed to a certain level of expenditure when she was told that she was not entitled to a death benefit lump sum. Consequently, she had to withdraw £20,000 from a Prudential investment. Of the £20,000 withdrawal, £17,486 was used to purchase a holiday, a three-piece suite, a summer house, outside sun canopy and to fund, in part, buying a car.

Her Prudential investment used a process called smoothing to protect her from day- to-day investment volatility. This worked by projecting forward 15 years, based on the investment’s underlying asset allocation. This arrived at an expected growth rate, which was then applied to the investment each day. This long-term expectation was revised every quarter with the growth rate amended accordingly.

In 2021, her expected growth rate was 5.7% which increased to 7.3%. Since the £20,000 withdrawal the cumulative fund performance was 27.5%. This meant that because of the provision of incorrect information, she had suffered a financial loss equal to the investment return she would have received if she did not make a withdrawal from the Prudential investment.

She believed that the representation made to her in Mercer’s email of 5 March 2021 meant Estoppel by Representation was relevant. As she understood it, Estoppel by Representation was a legal principle designed to prevent a party from going back on, or contradicting, a statement due to an inconsistency in their wording or actions, which would cause injustice.

None of the information provided to Mr Y when he claimed IHER mentioned that, in the event of his death, there was a cap on whether a death benefit lump sum would be payable. To be aware of the provisions in the Rules regarding death benefit lump sum would require pensioners to review complex and confusing rules. It did not appear that Mr Y was ever provided with a copy of the Rules, or a Scheme booklet. 6 CAS-80646-G2G3 Compensation of £1,000 should be considered and paid in recognition of the considerable time her son-in law and friend had spent helping her on this matter.

The Trustee’s position

Mercer had already recognised and paid £500 to Mrs Y for the poor service that she experienced in the setup and payment of her widow’s pension. So, it believed that this element of Mrs Y’s complaint was settled. There was no doubt that Mrs Y was provided with incorrect information about the amount of a possible death benefit lump sum. In recognition of this, Mrs Y was offered £1,500, which it believed was a fair and proportionate level of redress. Overall, Mrs Y had been offered £2,000.

Despite being incorrectly told the value of the death benefit lump sum, it was always made clear that the lump sum was at the discretion of the Trustee. So, Mrs Y was not told that she would receive all or any of the lump sum, if one was payable. The Trustee was only able to pay benefits and death benefits in accordance with the Rules. Mrs Y was not entitled to the payment of a death benefit lump sum as one was not payable. It held no discretion in the matter.

Mr Y applied for, and was granted, IHER. Generally, his normal retirement age was 60; however, due to the IHER benefits available to him, it was uplifted to age 65. This meant that his benefits were uplifted by five years, to the maximum of 40 years of service, without any reductions.

As Mr Y was granted IHER, he was not provided with a deferred benefit quotation, though one could have been provided if requested. Nor was it standard practice to provide a member with a CETV unless one was requested. In the Trustee’s view, sufficient information was provided to Mr Y about his entitlement, and sufficient information was available to Mr Y if requested. This included a copy of the Rules and the Scheme booklet.

Page 15, paragraph 5 of the Scheme booklet said:

“If you die while receiving an ill-health pension, the Scheme may pay a lump sum. We will check the difference between the death in service lump sum payable if you died on the day you retired, with the lump sum and pension payments, excluding increases, actually paid to you up to the date you died.”

The Scheme booklet made clear that it was a summary of the Rules and did not cover every individual circumstance. It was agreed that the specifics of the Rules would likely be hard for members to understand or interpret correctly. Mercer or the Scheme’s Pension Manager were always available to help interpret the Rules. It was also open for Mr Y to obtain independent advice on his benefits if he wished to.

It had already provided Mr Y with an illustration of what would have been payable if he deferred his benefits to 2019, instead of taking IHER in 2016. This made clear that Mr Y was provided with a greater level of benefit in 2016 due to the enhancement offered from IHER.

7 CAS-80646-G2G3 It did not agree that Mrs Y was entitled to any further compensation, or redress. Nor did it agree that she had suffered any financial loss.

Adjudicator’s Opinion

“When it comes to estoppel by representation or promissory estoppel, it seems to me very unlikely that a claimant would be able to satisfy the test of unconscionability unless he could also satisfy the three classic requirements.

They are:

(a) a clear representation or promise made by the defendant upon which it is reasonably foreseeable that the claimant will act,

(b) an act on the part of the claimant which was reasonably taken in reliance upon the representation or promise, and

(c) after the act has been taken, the claimant being able to show that he will suffer detriment if the defendant is not held to the representation or promise. Even this formulation is relatively broad brush, and it should be emphasised that there are many qualifications or refinements which can be made to it”.

Regarding the test of “unconscionability”, Neuberger LJ said:

“…If one had to identify a single factor which a claimant in an estoppel case has to establish in order to obtain some relief from the court it would be unconscionability - see per Robert Walker LJ in Gillett v Holt [2000] Ch 198 especially at 225 and 232”.

The Adjudicator reviewed the available evidence, in addition to Mrs Y’s submissions and said that Mercer’s email of 5 March 2021 did not provide a clear representation. This was because each of Mercer’s emails, after 5 March 2021, stipulated that the payment of a death benefit lump sum was payable at the discretion of the Trustee. This implied that the lump sum could have been split between a number of different potential beneficiaries.

8 CAS-80646-G2G3 The view was that as the representation made to Mrs Y was not unequivocal, it could not be said that it was reasonable for Mrs Y to have committed to the financial expenditure that she did. That being, holiday, furniture, a summer house and garden canopy as well as a part payment on a car. When Mrs Y learned of the correct position regarding the lump sum, she disinvested £20,000 from a Prudential investment to cover her expenditure. In the Adjudicator’s view, Mrs Y suffered a loss of expectation, as opposed to a financial loss, as the value of the benefits paid to Mr Y extinguished any possible death benefit lump sum that she might have been entitled to.

The Scheme Rules provided that as Mr Y’s date of death was before his normal retirement age of 60, and he had taken IHER, any death benefit lump sums needed to be calculated in accordance with rule 21(2). The value payable under rule 21(2) is calculated by undertaking a comparative calculation using the formula set out under rules 20(1)(a)(iii), and rule 20(3), of which the highest figure is used. In Mr Y’s case, the overall figure was subject to a cap of 4.5, due to rule 20(4), providing a figure of £224,052.89. Thereafter the value of Mr Y’s PCLS and the pension payments received are calculated to his date of death, which for Mr Y, amounted to £230,057.61. This meant that a death benefit lump sum was not payable.

Following an analysis of the relevant Scheme Rules, the Adjudicator was satisfied that Mercer and the Trustee had acted within the scope of the Scheme Rules and that a death benefit lump sum was not payable after Mr Y’s death. It was noted that the Trustee had offered Mrs Y £1,500, in addition to the £500 already paid to her. The Adjudicator recommended that Mrs Y might accept this offer, as it was in line with the Pensions Ombudsman’s recommended redress for severe maladministration.

In response to the Estate’s complaint that Mr Y was provided insufficient information about death benefits, the Adjudicator said that it was difficult to conclude how an individual would have acted with the benefit of hindsight. That being said, even if Mr Y was informed of how a death benefit lump sum was calculated, it was likely that he would have elected to take IHER in any event. This was because Mr Y applied for, and was granted IHER, in 2016. It seemed unreasonable to suggest that Mr Y would decline an enhanced IHER pension when he applied for the benefit as he was deemed unable to work.

Mrs Y suggested that Mr Y would have deferred the payment of his benefits until 2019, when his health deteriorated. This statement was, in the Adjudicator’s view, made with the benefit of hindsight as Mr Y would not have been in a position to 9 CAS-80646-G2G3 determine how his health would progress to such a degree that he needed to claim his pension. Additionally, the Trustee provided Mrs Y with illustrative figures that confirmed that if Mr Y deferred his pension until 2019, he would have received considerably lower benefits than those he received via IHER, in 2016.

The information provided and available to Mr Y was sufficient. There was no requirement to provide Mr Y with illustrative statements, or a CETV, unless one was requested, neither of which were. If, as Mrs Y has suggested, the death benefits payable to herself were an important factor in Mr Y’s decision to claim, or to not claim his pension, it would have been expected that enquiries would have been made in regard to the death benefits available. No such enquiries were made. In any event, sufficient information was available, on request, in the form of the Scheme booklet and the Rules, if required.

Mrs Y did not accept the Adjudicator’s Opinion, and the complaint was passed to me to consider. Mrs Y provided her further comments which are:-

• She believed that the provision of the incorrect statement by Mercer amounted to a clear representation. Mercer said that the death benefit lump sum was discretionary; however, this would mean that the Trustee knew of, or were actively seeking other potential beneficiaries. She did not believe that it was as she was the only reasonable beneficiary for the death benefit lump sum.

• It was unclear how it could be said that she had not suffered a financial loss as, due to the provision of Mercer’s incorrect statement, she had committed to a certain level of expenditure. She did not agree that any expenditure that she committed to after she was told that she was eligible for the death benefit lump sum was of any relevant consideration.

• In regard to the expenditure she committed to, she referred to the terms and conditions of each order; telephoned the suppliers to explain her circumstances regarding Mercer’s misinformation; in some instances, she visited the supplier in person to explain the situation; and she estimated that if she cancelled the orders she would lose over £6,000 in deposits that she had already paid. To help mitigate the financial loss she suffered due to the misstatement; she disinvested £20,000 from a Prudential investment, to cover her orders.

• She relied on the information provided to her by Mercer to guide her expenditure commitments. There was no reason to believe that the death benefit lump sum would be payable to anyone beside herself as Mr Y’s wife. At no point between 5 March 2021 and May 2021 was there any suggestion that a death benefit lump sum was not payable under the Scheme. If any doubts regarding this lump sum were raised, she would not have committed to the expenditure that she did.

The Trustee provided its additional comments and said that it was incorrect for Mrs Y to assume that she was the only potential beneficiary of the death benefits lump sum. In completing information gathering forms, following Mr Y’s death, she provided the details of herself and Mr Y’s two daughters, who were each considered as potential 10 CAS-80646-G2G3 beneficiaries. Mrs Y committed to a level of expenditure based on the assumption that the Trustee would make no other decision than to pay her the entirety of the lump sum, which in any event, was not payable under the Scheme Rules.

Ombudsman’s decision

The prevailing issue in Mrs Y’s complaint is that she was provided with an incorrect statement about the benefits payable after Mr Y’s death. That is, a death benefit lump sum of £23,863.20. This error is sufficiently serious to warrant a finding of 11 CAS-80646-G2G3 maladministration. Nonetheless, Mercer and the Trustee have a duty to act in accordance with the Rules, which, as I have said, did not provide for the payment of a death benefit lump sum after Mr Y’s death. While the provision of incorrect information can amount to maladministration, it does not, in of itself, confer an entitlement.

Where there is evidence that a representation may have been made by a party, upon which the member reasonably relies to their detriment, then Estoppel by Representation should be considered. If the individual succeeds in this argument, it will prevent the other party from going back on the representation. As the Adjudicator has already explained, Neuberger LJ set out a three-limb test that should be met in order for an individual to succeed in a claim for Estoppel by Representation. The three limbs to the test are summarised in paragraph 43.

Mrs Y claims that after she was told that a death benefit lump sum was payable, she committed to a certain level of expenditure on the expectation that the Trustee would pay her the death benefit lump sum, in full. She has said that there was no suggestion between 5 March 2021 and May 2021 that the lump sum might not be payable. So, she believes it was reasonable for her to rely on the representation made to her on 5 March 2021.

I disagree. Having reviewed the evidence, Mercer made clear in the email of 5 March 2021 (and referred to in paragraph 17 above) that the payment of the lump sum was subject to Trustee discretion: “The distribution of the lump sum death benefit is at the discretion of the Trustees”. There was also no suggestion that Mrs Y would be the sole recipient of the lump sum. Rather, as the email on which Mrs Y seeks to rely contains a statement that the payment was discretionary, it cannot be said that a clear promise had been made to pay the sum to her.

Therefore, I find that the statement made by Mercer, while incorrect, was not sufficient to allow Mrs Y to commit to the financial expenditures that she did. I note that Mrs Y did follow up on the payment of the death benefit lump sum on a number of occasions between March and May 2021. Each time she was told that the Trustee was yet to make a decision regarding how to pay the sum, this was until it was referred to the Scheme lawyers for review.

Overall, I do not agree that Mrs Y was provided with an unequivocal representation on 5 March 2021, nor do I agree that it was reasonably foreseeable for Mrs Y to have relied on this statement to the extent that she did. I find that Mrs Y’s argument has not passed the first limb of the Estoppel by Representation test, so there is no requirement to consider the remaining two limbs of the test as without passing the first limb, Mrs Y’s Estoppel by Representation argument cannot succeed.

Financial loss

Mrs Y is claiming for a financial loss of £26,003.20. This includes the expected £23,863.20 death benefits lump sum; the investment growth of £1,140 that she lost

12 CAS-80646-G2G3 by disinvesting her Prudential investment (£20,000) which had an expected return rate of 5.7%; and £1,000 for the distress and inconvenience she has suffered.

For Mrs Y to successfully claim a financial loss, as a result of Mercer’s maladministration, she is required to demonstrate that she will now suffer financial detriment, through no fault of her own, and that it was reasonable for her to act in the way that she did. She is also required to demonstrate what steps she took to mitigate her circumstances when the correct position was made clear to her.

I have already established that it was not reasonable for Mrs Y to act in the way that she did based on Mercer’s email of 5 March 2021. Mrs Y proceeded to make a number of significant purchases based on the information provided in Mercer’s email, even though there was no guarantee that Mrs Y would be the sole recipient of the death benefit lump sum. Further, Mrs Y was told on a number of occasions that the Trustee had not exercised its discretion on who the death benefit lump sum would be paid to, and in what proportions. I do not agree that it is reasonable to say that Mrs Y suffered a financial loss, through no fault of her own, when she acted on her assumption, and before any form of decision was communicated to her regarding the value of a potential death benefits lump sum.

I note the steps that Mrs Y has said that she undertook to mitigate her circumstances. While it could be argued that Mrs Y could have cancelled her orders, in spite of possibly losing £6,000 worth of deposits, she did disinvest the Prudential investment worth £20,000. The investment loss that Mrs Y is claiming (£1,140) is less than the £6,000 worth of deposits. Overall, I find that Mrs Y did take sufficient steps to mitigate her own perceived financial loss, when the correct position was made clear to her.

As is clear, it was reasonable for Mrs Y to disinvest the £20,000 Prudential investment after she was notified of the correct position. However, as it was unreasonable to act in the way that she did, based on the 5 March 2021 email, I do not consider the expenditure that she committed to as a financial loss. Nor do I consider that the expected investment return of 5.7% on her Prudential investment can be treated as a financial loss either.

Mrs Y had inferred that the expenditure that she committed to after Mercer’s misstatement was irrelevant to her complaint. I disagree. How Mrs Y acted after the misstatement is an entirely relevant consideration. Given that Mrs Y herself raised the Estoppel by Representation argument, one of the limbs of the test being “an act on the part of the claimant which was reasonably taken in reliance upon the representation or promise”. In Mrs Y’s case, this would extend to the expenditure she committed to after the 5 March 2021 email, which I have established, was unreasonable.

While I appreciate that Mrs Y will be disappointed with this outcome, Mercer and the Trustee can only pay benefits in accordance with the Scheme Rules, which do not provide for a death benefit lump sum to be payable following Mr Y’s death. The

13 CAS-80646-G2G3 Estoppel by Representation argument has failed on the first limb of the required legal test, so there is nothing further to consider on the matter.

I agree with the Adjudicator that the £1,500 offered to Mrs Y by the Trustee sufficiently recognises the distress and inconvenience caused to Mrs Y by the misstatement. This is in addition to the £500 already paid to Mrs Y. The Trustee should proceed with contacting Mrs Y to pay the £1,500 originally offered to her.

I do not uphold Mrs Y’s complaint.

Dominic Harris

Pensions Ombudsman

14 May 2025

14 CAS-80646-G2G3 Appendix Extracts of the EDF Energy Generation and Supply Group Trust Deed and Rules

Rule 20 – Death in Service Lump Sum

“(1) In the case of a Transferred London Member or an Original SEEBOARD Member, where a Member dies before Retirement, a sum shall be paid to his estate* of an amount equal to:

(a) three years’ Pensionable Salary, in the case of:

(I) a Member who leaves a widow or widower and is either an Original London Member (who became a Member prior to 1 January 1995), an Original SEEBOARD Member or a Transferred SWEB Member;

(II) a Transferred PowerGen Member who leaves no widow or widower;

(III) a Transferred Eastern Member who entered Service or joined the Scheme before 1 December 1999 and leaves a widow or widower;

(b) two years’ Pensionable Salary, in the case of a Transferred PowerGen Member who leaves a widow or widower;

Or

(c) four years’ Pensionable Salary in any other case,

together, in the case of an Original SEEBOARD Member, a Transferred SWEB Member or Transferred Eastern Member, with interest (if any) accrued on such sums prior to the date of payment; Provided That if the Member’s contributions calculated in the manner shown in Rule 17(3) exceed an amount equal to four years’ Pensionable Salary then the sum payable under this paragraph (calculated, in respect of a Transferred SWEB Member, before the addition of interest, if any) shall be increased by an amount equal to the excess.

[*Note that the Scheme's Rules allow members to serve a notice so that this amount is payable to one or more of a class of eligible persons at the discretion of the Trustee.]

(2) Subject as herein provided, where a sum is payable under paragraph (1) in the case of a Transferred London Member, or under paragraphs (1) or (3) in the case of an Original SEEBOARD Member, in respect of a Member who leaves a widow or widower, there shall in addition be paid to the widow or widower of the Member an amount equal to one year’s Pensionable Salary (together, in the case of an Original SEEBOARD Member, a Transferred SWEB Member or Transferred Eastern Member, with interest (if any) accrued on such amount prior to the date of payment thereof). By notice within three months after the death of the Member and 15 CAS-80646-G2G3 in lieu of such payment (inclusive, in the case of an Original SEEBOARD Member, a Transferred SWEB Member or Transferred Eastern Member, of interest (if any) accrued to the date of such notice), the widow or widower may convert the whole of the amount of the payment into additional pension actuarially equivalent to the amount forgone, subject to the provisions of Rule 25.

(3) In the case of an Original SEEBOARD Member or an Original London Member, where a Member dies on or after attaining age 55, before Retirement no payment shall be made under paragraph (1) to the estate of an Original SEEBOARD Member or a Transferred Eastern Member if the aggregate of:

(a)

(i) if the Member leaves a widow or widower, a sum equal to two years’ Pensionable Salary; and

(ii) in any other case a sum equal to three years’ Pensionable Salary,

subject in either case to the provisos to paragraph (1) and to paragraph (6); and

(b) the sum calculated in accordance with paragraph (3A),

is greater than the amount payable under paragraph (1), in which event the said aggregate sum, together with interest accrued thereon (if any) from the date of his death to the date of payment thereof, shall instead be paid to the estate of the Member.

(3A) The calculation of the sum referred to in paragraph (3)(b) shall be made by taking the pension that would have been payable to the Member (on the assumption that he had retired under paragraph (2) of Rule 16 on the date of his death, but excluding any portion surrendered under Rule 27) and multiplying it by the appropriate figure shown in the second column of the following scale according to the age of the Member at the date of death:

Age Number at of Death times

55 3

56 3

57 3½

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59 4½

60 or 5 over

together, in the case of a of a Transferred SWEB Member or an Original SEEBOARD Member, with interest (if any) on such sum prior to the date of payment thereof.

(4) Where the sum payable in respect of a Transferred PowerGen Member, having applied Rule 20(1), and where applicable, Rule 20(2) and 20(3), is less than four years’ Pensionable Salary the sum paid to the Transferred PowerGen Member’s estate shall be increased to four year’s Pensionable Salary. The total of the sums payable under this Rule in respect of any Member shall not exceed an amount (excluding interest in the case of on Original SEEBOARD Member, a Transferred SWEB Member or a Transferred Eastern Member) which is equal to four and a half years’ Pensionable Salary of that Member or the amount (including interest in the case of an Original SEEBOARD Member, a Transferred SWEB Member or Transferred Eastern Member) permitted by Rule 25(4) whichever is less. If the total of the sums payable under this Rule would, in the case of an Original SEEBOARD Member, were it not for the provisions of this paragraph, exceed the said amount, then where the Member leaves a widow or widower the sum to be abated shall be the sum payable to his estate. In calculating the sums payable under this Rule, notwithstanding that the widow or widower of a Member has given a notice under paragraph (2), a sum equal to one year’s Pensionable Salary shall be deemed to have been paid under that paragraph in respect of that Member.”

Rule 21(2) – Lump sum on the death of an ill-health retiree who retired before Normal Pension Age

(2) Subject to paragraph (3), on the death before, at or after, Normal Pension Age of a Member who retired through Ill-Health before attaining Normal Pension Age under Rule 15, there shall be paid to his estate any excess of the amount (excluding interest in the case of a Transferred SWEB Member or Transferred Eastern Member) which would have been payable under Rule 20 if he had died in Service on the date he retired over the aggregate amount of the Benefits paid to him but calculated as if:

(a) any pension increases paid to him under Rule 26 had not so been paid; and

17 CAS-80646-G2G3 (b) any portion of his annual pension surrendered under Rule 27 and/or Rule 28 had not been so surrendered; Provided That in the case of a Member in respect of whom payment would have been made under paragraph (3) of Rule 20 had he died in Service on the date he retired, any portion surrendered under Rule 27 or Rule 28 shall not be so aggregated;

together, in the case of an Original SEEBOARD Member, a Transferred SWEB Member or Transferred Eastern Member, with interest (if any) accrued on such excess prior to the date of payment thereof.”

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