Aviva Pension Plan · CAS-42431-G2M7

CAS-42431-G2M7

Ombudsman’s Determination Applicant Mr S

Scheme Aviva Pension Plan (the Plan)

Respondent Aviva

Outcome

Complaint summary

Background information, including submissions from the parties

“AND UPON the Respondent undertaking to the Court that he will give the Petitioner 56 days notice in writing of his intention to retire to the Petitioner

AND UPON the Respondent undertaking to the Court not to draw any benefits from his personal pension policy with Axa Equity and Law in such form to frustrate the provisions of the Order below without consent in writing to the Petitioner

1 CAS-42431-G2M7 AND UPON the Respondent undertaking to the Court that he will not transfer his pension rights from his policy number DD97033 with Axa Equity and Law to any other pension policy or scheme without the consent in writing of the Petitioner such consent not to be unreasonably withheld.

IT IS HEREBY ORDERED:

1. … 2. … 3. Upon drawing of a lump sum payable to the Respondent upon his retirement under the terms of his pension with Axa Equity and Law the Respondent will commute 50% of the benefits capable of commutation under the said pension. 4. The Trustees or Managers of the Respondents said pension do pay or cause to be paid to the Petitioner on behalf of the Respondent a sum equal to 50% of the maximum lump sum payable to the Respondent upon his retirement under terms of the said pension.”

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• Over the course of the transfer he had repeatedly advised that Mrs C was entitled to 50% of the main pension. He advised that she was not entitled to the protected rights.

• Protected rights were intended to be for the benefit of the named pension holder only. It could not be assigned or passed to other parties. For this reason, it was kept separate from the main pension. The Order did not need to mention it because there was no need and it would have been referenced if that was the intention. Mrs C was not entitled to any part of the protected rights.

• The amount taken from the SIPP as tax free cash was not 25%, it was only the protected rights element. Aviva had said that this was his only option to keep the protected rights separate, otherwise they would be included in the main pension. There was a second plan, which still included a tax free lump sum entitlement.

• Aviva should have informed him that under the current law it should be treated as one plan. If it had his actions would have been different and he would have discussed it with Mrs C. However, due to Aviva’s actions they are no longer on good speaking terms and she does not trust him, causing significant detriment to his family’s relationship.

• Aviva has accepted it made mistakes and he considers it negligent. It provided incorrect information and its staff had a lack of knowledge of protected rights.

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• Certain individuals at Aviva had made unilateral decisions to inform Mrs C of the situation and in doing so entrenched the situation.

• Additionally, those individuals effectively investigated their own actions, responding to his formal complaint.

• If Aviva’s interpretation of the divorce agreement is correct, then it is effectively rewriting the divorce agreement. Today’s pension law should not be applied to their divorce some 20 years ago.

• The matter has required several telephone calls, which achieved nothing. In June 2019, his doctor advised him to stop because it was affecting his health.

• Aviva has since blocked an attempt to withdraw further funds or seek Mrs C’s consent to do so. It is only interested in him returning the tax free lump sum.

• The matter has severely affected his family relationships and his friendship with Mrs C.

4 CAS-42431-G2M7 Adjudicator’s Opinion

• The Order made no distinction between non-protected and protected rights, referring only to the joint policy reference. The directions within the Order therefore applied to both parts of the Plan.

• Although at the time the Order was made protected rights could not be commuted, and so it was not foreseen that Mrs C would benefit from it, the wording of the Order is broad. Under the current pension regime, on commuting the former protected rights, the Order requires Mrs C to receive 50% of the lump sum payable.

• The Adjudicator acknowledged Mr S’ strength of feeling and the impact that this change might have on the equity of the Order as a whole, but that did not invalidate Aviva’s interpretation given the changed pension landscape.

• The Adjudicator was of the opinion that Aviva had correctly interpreted the terms of the Order and was intending to apply them to the Plan as it was required to by the court. In these circumstances it was reasonable for Aviva to seek to recover the overpayment from Mr S. Mr S could challenge this by seeking a variation of the Order from the courts.

• Mr S had received an overpayment of his pension that Aviva was seeking to recover. Where an overpayment has occurred a pension scheme is generally entitled to recover the amount. Mr S had been invited to submit a defence from recovery, for instance change of position or estoppel, but declined on the basis that he believed Aviva had no right to recover the any of the money.

• In respect of Aviva’s handling of the situation, the Adjudicator considered there were significant failings. The Order was ignored at the point of transfer and when the lump sum was paid out; this amounted to maladministration, despite Mr S apparently having highlighted the Order prior to the transfer.

• Aviva was entitled to liaise with Mrs C given the terms of the Order and share its interpretation of the Order with her. It was also Aviva’s responsibility not Mrs C, to recover the money from Mr S.

• Mr S had noted that the individual that had informed Mrs C of the situation also handled the complaint, investigating their own actions. In the Adjudicator’s opinion it was not unreasonable given their understanding of the situation and as point of contact for both Mr S and Mrs C. This was not maladministration and the Adjudicator noted that the matter was later handled by another individual.

5 CAS-42431-G2M7 • The telephone call of November 2019 was not handled well by Aviva. Although Mr S was correctly referred on to the Ombudsman, as he was dissatisfied by the response to the complaint, it was also reasonable to expect his request for a drawdown of pension to be processed and for his complaint to be escalated to a manager. Despite being told it would be, the matter was not taken forward.

• Aviva’s maladministration had a significant impact of Mr S’ family relationships.

• Had Aviva acted appropriately by following the terms of the Order, that it was aware of, the subsequent issues and overpayment would not have arisen. This had caused Mr S a serious level of distress and inconvenience and the issues remained outstanding and Aviva should pay him £1,000 in respect of this.

Mr S did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Mr S provided his further comments which do not change the outcome. I agree with the Adjudicator’s Opinion and note the additional points raised by Mr S.

Ombudsman’s decision

I uphold Mr S’ complaint in part only. 6 CAS-42431-G2M7 Directions

Anthony Arter

Pensions Ombudsman 19 April 2021

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