Bp Pension Fund · CAS-49197-C8C6

CAS-49197-C8C6

Ombudsman’s Determination Applicant Dr G

Scheme BP Pension Fund (the Fund)

Respondent BP Pension Trustees Limited (the Trustee)

Outcome

Complaint summary

Background information, including submissions from the parties On 18 September 1996, Dr G joined BP and became a member the Fund.

In 2006, Dr G was given notice of redundancy.

In May 2006, the Fund administrator (the Administrator) sent Dr G redundancy terms (the Terms). It explained that:-

• In February 2028, her yearly pension would be £11,532.73.

• If she took her pension in February 2018, at age 50, her yearly pension would be £8,068.62.

• There would be a reduction of 30.04% for taking the retirement benefits at age 50.

On 30 June 2006, Dr G was made redundant by BP and became a deferred member of the Fund.

On 27 March 2007, the Administrator sent Dr G a leaving options statement (the Statement) which explained that:

1 CAS-49197-C8C6 • her benefits would remain deferred until she reached age 60, her normal retirement age (NRA);

• she could take her benefits when she reached age 50, with a reduction; or

• she could choose to transfer her benefits to another pension scheme.

The Statement also said:

“You may elect to receive an immediate pension at a reduced rate any time from your 50th birthday (55th birthday from 6 April 2010). The amount of reduction will depend upon the age at which your pension commences.”

On 6 April 2010, the Trustee changed the Fund rules (the Rules) and the minimum retirement age for Dr G became age 55.

On 13 October 2016, Dr G decided to explore the possibility of taking a career break of three to six months. She wrote to the Administrator and asked:

• if she could take her retirement benefits when she reached age 50; and

• if she could, would there be a reduction of 15%, for taking the benefits five years earlier than age 55.

On 14 October 2016, the Administrator said:

“In 2010 the rule changed and the earliest age you are able to take your pension is age 55. You will be able to take your pension at age 55 without any reduction.”

Dr G has said that she took an extended career break between 2016 and 2019, based on the Administrator’s response on 14 October 2016.

On 20 October 2018, Dr G wrote to the Administrator to request an illustration of a Cash Equivalent Transfer Value (CETV).

In response, the Administrator directed Dr G to its website to check her current transfer value.

On 22 October 2018, Dr G responded and said:-

• The illustration of a CETV said that there would be a reduction applied if she took her retirement benefits before, she reached age 60.

• She believed that she could take her retirement benefits at age 55, without a reduction, because she left the Fund before the Rules changed in 2010.

On 23 October 2018, the Administrator responded and said:-

2 CAS-49197-C8C6 • Dr G was made redundant before she reached age 40, so, there would be a 15% reduction applied to her retirement benefits if she took them when she reached age 55.

• She could only be granted an unreduced pension from age 55 if: she was made redundant before 1 December 2006; had more than 10 years of qualifying service; and was at least 45 at the time of redundancy.

On 6 November 2018, Dr G responded and said that one of the terms of her redundancy in 2006, was that she was entitled to an unreduced pension when she reached age 55.

On 8 November 2018, the Administrator provided Dr G with a copy of the Statement and highlighted the points mentioned in paragraph eight.

In response, Dr G sent the Administrator a copy of its email from 14 October 2016 which had said “You will be able to take your pension at age 55 without any reduction”.

Between November 2018 and January 2019, Dr G corresponded with the Administrator to establish her entitlement for when she reached age 55.

In January 2019, the Administrator telephoned Dr G. It informed her that the information she had received on 14 October 2016, was incorrect and did not reflect her entitlement within the Fund.

On 2 April 2019, Dr G submitted a formal complaint to the Administrator. She said that:-

• She was incorrectly informed that she could take her retirement benefits, unreduced, when she reached age 55.

• She had relied on the information, provided on 14 October 2016, to make important decisions.

• The Administrator should pay her retirement benefits, on an unreduced basis, when she reached age 55.

On 26 April 2019, the Administrator responded to Dr G’s complaint. It apologised for providing her with incorrect information and explained that:-

• Under the Rules, she could take early retirement at any time from age 55, subject to an actuarial reduction.

• The Terms and the Statement both explained that Dr G could only take unreduced benefits when she reached age 60. This was supported by a member handbook, illustrations and all documents provided through the Trustee’s website, available to Dr G.

3 CAS-49197-C8C6 • The provision of incorrect information did not entitle Dr G to an unreduced pension at age 55 and it had no discretion to pay benefits outside of the Rules.

On 31 May 2019, Dr G made a complaint under the Fund’s Internal Dispute Resolution Procedure (IDRP). Dr G’s IDRP complaint reiterated the same points that she had raised in her formal complaint.

On 8 August 2019, the Trustee responded to Dr G’s IDRP complaint. The Trustee did not uphold Dr G’s complaint and said:-

• It could only act in accordance with the Rules.

• The provision of incorrect information did not entitle Dr G with the right to receive the incorrect level of benefits.

• Dr G had suffered a loss of expectation rather than a financial loss.

• The Trustee had seen no evidence that Dr G had made “personal and financial decisions” after she received the incorrect information.

• It offered Dr G a sum of £750 in recognition of the distress and inconvenience she had suffered due to the Administrator’s misinformation and for the delays in responding to her complaint.

Dr G’s position:-

• She contacted BP in October 2016 to establish her financial position because she was considering taking a career break of three to six months.

• She had decided to take a two to three year career break based on the information that she received on 14 October 2016.

• Had she received the correct information in 2016 she would have returned to work in mid-2017. As a result, she returned to work in September 2019 and so has lost out on two years’ salary.

The Trustee’s position:-

• It was unreasonable for Dr G to have relied entirely on the information sent to her, on 14 October 2016, to make “irreversible financial decisions” and to take an extended career break.

• It was not clear how a 15% reduction of her pension benefits, which could only be taken in February 2023, caused her to change her career break from three to six months to a three-year career break.

• Dr G had continued with her career break, until September 2019, after she was informed that her pension would be reduced for payment, if taken at age 55.

4 CAS-49197-C8C6 Adjudicator’s Opinion

The Trustee accepted the Adjudicator’s Opinion and said that the offer of £750 remains payable to Dr G.

Dr G did not accept the Adjudicator’s Opinion and her complaint was passed to me to consider. Dr G provided her further comments which do not change the outcome. I agree with the Adjudicator’s Opinion and note the additional points raised by Dr G. Dr G’s further comments are as follows:-

• She had planned a two-year career break based on the information that the Administrator provided to her in October 2016. However, she began to seek re- employment in March 2018, with a view to becoming re-employed by October 2018.

• Had she known the correct position, she would have sought re-employment from January 2017, with a view to becoming re-employed by April or June 2017.

• She was offered a new job in the Summer of 2018. However, due to a company re-organisation, she was informed that her new role had been made redundant.

5 CAS-49197-C8C6 After several meetings and interviews from Spring 2019 onwards, she was offered a new role in September 2019.

• She believed that the information provided to her in October 2016 was correct. This was due to a change in the Rules in 2010, whereby her minimum retirement age increased from age 50, to 55. She thought that it was a reasonable compromise that she could claim an unreduced pension at age 55, as a result.

• She believed that she had suffered a real financial loss because she had made retirement plans that were based on claiming an unreduced pension at age 55, not 60.

• She would have been unaware that she was only entitled to an unreduced pension, at age 60, had she not contacted the Administrator when she did.

• The Trustees’ offer of £750 for distress and inconvenience was insufficient and did not reflect her financial loss. She believed that it would be reasonable for the Trustees to honour the statement made in October 2016.

Ombudsman’s decision

6 CAS-49197-C8C6

I do not uphold Dr G’s complaint.

Anthony Arter

Pensions Ombudsman 24 May 2021

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