Shell Contributory Pension Fund · CAS-80924-X8M9

CAS-80924-X8M9

Ombudsman’s Determination Applicant Mr T

Scheme Shell Contributory Pension Fund (SCPF)

Respondent The Trustee of the SCPF (the Trustee)

Outcome

Complaint summary Mr T has complained that he was provided with incorrect pension estimates in March 2015 and March 2017 which overstated the value of his potential benefits. The errors were not identified until 2019. As a result of the errors, Mr T says he changed his spending habits, and his retirement planning was impacted. He feels he should be compensated for financial loss.

Background information, including submissions from the parties

On 25 May 1992, Mr T commenced employment with Enterprise Oil and joined the Enterprise Oil Pension Scheme (EOPS).

In November 1992, Mr T transferred his BP Pension Scheme benefits, from a previous employer, BP, to his EOPS. The £11,540.07 transfer bought two years and 11 months additional service in the EOPS.

On 30 April 1996, Mr T left the employment of Enterprise Oil and became a deferred member of the EOPS.

From 31 March 2003, deferred members of the EOPS were able to transfer their pension benefits to the SCPF. Mr T joined the SCPF on 1 April 2003. As part of the transfer agreement, members no longer in company employment, such as Mr T, were 1 CAS-80924-X8M9 provided the same benefits as would have been provided under the EOPS. Mr T’s Normal Retirement Date (NRD) is in June 2027, at age 60. His State Pension Age (SPA) is in June 2034.

On behalf of the Trustee, Shell International Limited (SIL) carried out the administration of Mr T’s pension.

On 21 May 2004, the Trustee wrote to Mr T. It said:

“As requested, please find below details of your current deferred pension entitlement from the [EOPS].

Current Basic [EOPS] = £15,239.16 pa [per annum]

In addition to your basic pension entitlement, you are also entitled to a supplementary pension of £4,248.48 pa.

Therefore, the total pension payable from your [NRD] of …June 2017 currently amounts to £19,487.64 pa.

We would like to point out that the above figures are only estimated and the exact amount payable will depend on the statutory revaluation granted between now and the date payment commences. However, please be advised that there is a transfer- in guarantee of £11,946.96 pa included in your deferred pension and £3,861.36 pa included in your supplementary pension in respect of the transfer-in from the BP Pension Scheme. The guarantee has been calculated at your [NRD] and therefore does not attract increases.”

On 16 August 2007, Mr T telephoned SIL unhappy that he was previously incorrectly advised that he could take his pension unreduced in 2017, rather than the NRD in 2027.

On 28 May 2012, SIL sent Mr T a pension estimate:

“The total pension payable from your [NRD] of 9 September 2019 currently amounts to £26,000 pa…[which includes]…a supplementary pension of £4,600 which is payable until you reach [SPA].”

On 4 December 2012, a Pension Share Order (PSO) awarded Mr T’s former spouse 25% of his pension benefits. Mr T appealed the award.

On 6 December 2013, Mr T’s solicitor made the Trustee aware that an appeal against the PSO by Mr T had not been successful, so the PSO was to be implemented.

On 15 August 2014, SIL wrote to Mr T and said the PSO (also referred to elsewhere by SIL as the “Pension Sharing Annex”, “pension debit” and “divorce debit”), would be taken into account and reflected in any future statements. SIL said, as relevant:

2 CAS-80924-X8M9 “We have received a copy of the Pension Sharing Annex under Section 24B of the Matrimonial Causes Act 1973… From this we note that a [PSO] has been granted…against your pension from the Enterprise section of the [SCPF].

The order specifies that 25% of the value of your pension at 5 September 2013 should be transferred to your ex-spouse. Accordingly, your deferred pension entitlement has been reduced by the amount of £4,997.64 per annum.

This debit will be reflected in any future ‘Statement of Pension Benefits’ that you will receive.”

On 25 February 2015, Mr T says he contacted SIL by telephone and was reassured that the PSO had been deducted from his pension.

On the same day, Mr T requested a pension estimate from SIL.

On the same day, Mr T wrote to his accountant in response to an email asking if Mr T was free on 18 March 2015 to “discuss further SIPP and tax planning.” Mr T said, as relevant:

“That should be fine thanks,

I have requested a pension update from Shell and they confirm that they have paid out the 25% PSO to [my ex-spouse].

They also confirmed NRD is 60 (2027) and that I could have retirement early at 55 (2022) with a 20% reduction to any lump sum / pension payment.

They will get a revised pension statement to me within 2 weeks which should tie in well.

…”

On 18 March 2015, SIL sent Mr T a pension estimate. The letter was incorrectly dated 18 March 2014. It said, as relevant:

“…your estimated pension under the Enterprise section of the [SCPF] payable with effect from…June 2027 is £22,749.96 pa (which includes a supplementary pension of £515.64 pa payable between Normal Pension Age and State Pension Age). …

These figures are issued for “illustrative purposes” only and are not a guarantee of entitlement.

...”

On 30 March 2015, SIL sent Mr T a pension estimate. It said, as relevant:

“…since you left Company service your deferred pension from the Enterprise section of the SCPF has been increased by an amount of £18,567.92 pa, and accordingly your current total entitlement is £22,749.96 pa payable with effect from…June 2027. 3 CAS-80924-X8M9 …

If you wish to receive early payment with effect from…July 2022 it would amount to £12,600 pa. This payment includes statutory increases up to the date of calculation and has been reduced for early payment.

…

We would like to point out that the above figures are only estimated and the exact amounts payable will depend on any statutory increases granted between now and the date payment commences.

...”

On 2 March 2017, SIL sent Mr T a pension estimate. It said, as relevant:

“…your estimated pension under the Enterprise section of the SCPF payable with effect from 1 June 2027 is £24,498.84 pa (which includes a supplementary pension of £4,737.02 pa payable between Normal Pension Age and State Pension Age).

…

These figures are issued for “illustrative purposes” only and are not a guarantee of entitlement.

...”

In early 2019, Mr T was diagnosed with the disease Pemphigus. He requested an updated benefits statement and transfer value to fine tune his pension planning.

On 17 June 2019, SIL sent Mr T a pension estimate. It said, as relevant:

“We write to advise you of the estimated pension available to you at your NRD of … June 2027.

Since you left Company Service your deferred pension from the Enterprise section of the SCPF has been subject to a [PSO] and a Pension Debit has been placed against your deferred pension.

Following the implementation of the Pension Debit we can confirm that your basic Deferred Pension entitlement at your NRD is estimated to be £6,871.24 pa (which includes a Supplementary Pension of £411.70 pa payable between your NRD and State Pension Date).

…

Your total deferred pension at your NRD, including your transfer-in guarantee, is estimated to be £19,700 pa (which includes your Supplementary Pension of £3,400 pa payable between your NRD and SPD).

… 4 CAS-80924-X8M9 Please note that whilst undertaking this calculation it has been noted that our previous estimate issued to you in 2017 incorrectly quoted a higher pension figure. This higher pension figure quoted included your full transfer-in guarantee, which should have been adjusted to take into account your Pension Debit. Please accept our sincere apologies for this error.

…”

On the same day, SIL also sent Mr T a transfer of benefits statement (and a letter explaining how to transfer his pension benefits, enclosing relevant forms to commence transferring his pension benefits). The transfer value of £383,402 was guaranteed for three months from date of calculation.

On 21 June 2019 and 28 June 2019, Mr T raised queries with SIL about errors in the previous estimates provided.

On 18 July 2019, SIL wrote to Mr T. SIL said:

“Your benefits are not straightforward because:

• You have a transfer in guarantee from when you transferred your BP benefits into the Enterprise Oil pension scheme in November 1992 (the ‘transfer-in guarantee’).

• You have a divorce debit on your deferred pension, applicable from 5 September 2013.

• You have a supplementary pension.

…

I have reviewed your case and the errors came from the calculation of two individual parts of your pension: your transfer-in guarantee and your supplementary pension.

…

Our estimate of 30 March 2015 gave your pension as £22,749.96 pa at your NRD. In my review, I found that the supplementary pension of £3,861.34 pa was counted twice in the calculation.

Our estimate of 2 March 2017 gave your pension as £24,498.84 pa at your NRD. In my review, I found that the transfer-in guarantee had not been reduced by the relevant percentage of the pension sharing order [25%].

Our estimate of 17 June 2019 gave your pension as £19,700 pa at your NRD…and took into account both the correct amount of transfer-in guarantee and the correct deduction of the divorce debit. It also includes your supplementary pension of £3,400 pa payable between your NRD and your SPA (these figures are rounded down to the nearest £100 pa).”

5 CAS-80924-X8M9 On 10 October 2019, in a letter to The Pensions Ombudsman (TPO), the Trustee offered Mr T £1,000 redress for the non-financial injustice he had suffered.

On 14 November 2019, SIL sent Mr T a transfer of benefits statement which showed the transfer value of his pension benefits was £475,185.55, guaranteed for three months from the date of calculation.

On 17 December 2019, SIL wrote to Mr T to confirm that the transfer of his SCPF benefits, £475,185.55, would be paid to his SIPP (Self-Invested Personal Pension) on or after 2 January 2020. The transfer took place in early January 2020.

On 19 February 2020, SIL wrote to Mr T and confirmed the £1,000 distress and inconvenience payment had been paid to him.

In April 2020, Mr T made a complaint under stage one of the Trustee’s Internal Dispute Resolution Procedure (IDRP). Mr T said that, based on the reassurance given to him on the telephone by SIL on or around 25 February 2015 that a ‘Pension Debit’ had been deducted from his deferred pension, and the subsequent estimates of his benefits provided in March 2015 and March 2017:

“…It would have been reasonable to have expected a benefits statement for 2019 to be above £26,000 at NRD but it is now approximately £6,500 pa short in 2019 terms (£8,000 short in 2027 terms) of that which I have been advised that would take between £115,000 and £150,000 to cover the shortfall in expected pension at NRD.

…

Had I been made aware in 2014 or even 2017 of these shortfalls I could have taken that into consideration and would have altered my plans and finances and financial affairs accordingly – as it is I now have this shortfall to consider and with the disease [Pemphigus] and the limitations it places on my future earning ability I have really had a big blow to my life that I didn’t for one moment expect…

I can illustrate many instances of moneys spent (that is not retrievable) that would definitely not have been spent had I known the pension situation from the onset.”

Mr T’s IDRP complaint also included a letter from his accountant, which said that Mr T had shared the 18 March 2015 estimate with him for consideration in financial planning. He said that Mr T had always chosen to “pay down debt and forego luxuries to put him in a position to enable an early retirement.” However, “his projected income at retirement has given him confidence in recent months to enjoy some of his reserves. The trip to the USA to get married in September 2019 would not have been booked if he was in the full knowledge of his correct pension income in retirement. …

[Mr T] has contributed significant funds to his own SIPP. In the period 2014 to 17 March 2016 his company had capacity and sufficient cash reserves to make further

6 CAS-80924-X8M9 contributions. The company was wound up on the 17 March 2016 with cash in the bank in excess of £275,000.”

On 16 April 2020, the Trustee acknowledged Mr T’s IDRP complaint. As relevant, the Scheme Secretary of the Trustee said:

“…In line with our [IDRP], I will reply within two months with either my decision or an explanation of why my decision will be delayed and an estimated date for when my decision will be made.”

On 14 May 2020, the Trustee wrote to Mr T. As relevant, it said:

“I am reviewing your complaint where you request compensation for financial loss incurred as a direct result of the incorrect pension quotes we gave you. Can I start by apologising for these mistakes and for the inconvenience and distress they caused you.

In your complaint letter you said that you can supply “illustrations backed up with confirmations/receipts/bank statements etc. that can illustrate many instances of moneys spent (that is not retrievable) that would definitely not have been spent had I known the pension situation from the onset.” I need to request this information in order to decide whether you have suffered a loss as a result of relying on the inaccurate information that we gave you and, if so, how much that loss is.

…Unless you can show that you have incurred expenditure or made financial commitments in reliance on the incorrect information, then you will not be entitled to be compensated for loss of expectation based on the incorrect information. That is why I need to ask for details and evidence of specific expenditure and decisions.”

On 16 June 2020, Mr T spoke with the Scheme Secretary. The Scheme Secretary’s telephone note from this conversation said:

“[Mr T] emailed to request a call to discuss the information and evidence required to support his IDRP complaint.

On the call, I told him that I needed specific examples of decisions he had made on the basis of the incorrect information we had given him that had resulted in a financial loss to him – these may be things he did or things he did not do. And I needed some evidence of these decisions.

I explained considerations such as:

• The timing of the decisions vs the information we gave him.

• The context of these decisions vs his overall financial position and the size of the error in our estimates.

• Whether it was possible to undo the decision or mitigate the financial loss.

• Whether the decision had created something of ongoing value. 7 CAS-80924-X8M9 I also explained that I can only consider financial losses from past decisions based on the incorrect pension estimates and not his future financial outlook.

I was careful to explain that nothing in our discussion around how he might approach quantifying his claim indicated that I accepted or agreed with his claims. Once I had his information I would review it and investigate it thoroughly and take advice where needed to arrive at my decision. And I may need to contact him again for more information.

I explained that I was the sole decision maker on this and until now had avoided being involved in the case in order to remain independent.

[Mr T] indicated that he understood all this and he had found our call helpful. He also commented that his past discussions with <name redacted> and <name redacted> had been sympathetic.”

On 27 July 2020, Mr T wrote to the Trustee setting out a list of payments which he said were made in reliance of the incorrect estimates – see Appendix .

On 27 November 2020, the Trustee responded under stage one of its IDRP. It said:-

• It agreed it had provided Mr T with incorrect estimates in March 2015 and March 2017 and that this represented maladministration on its part. The estimates on 18 March 2015 and 2 March 2017 failed to apply the divorce debit to all elements of Mr T’s pension and double-counted the guaranteed supplementary pension of £3,861.34 pa. Additionally, the March 2017 estimate overstated Mr T’s pension payable at NRD by approximately £4,800 pa and by approximately £3,500 pa after his SPA, and the 18 March 2015 estimate misquoted the value of Mr T’s supplementary pension payable between NRD and SPA as £515.64 pa, when it should have been higher.

• The Trustee was legally required to pay the right benefits under the Scheme Rules. The incorrect benefits shown in the March 2015 or March 2017 estimate could not be paid as Mr T was never entitled to those amounts.

• Mr T experienced no actual financial loss, only a loss of expectation. It was not possible to say with any level of certainty what he would have done differently had the estimates been correct. It was possible that he would have made the same decisions about expenditure, for instance gifts to his sons and treating friends and family to his wedding in Las Vegas, regardless of the errors on the statements.

• The estimates included statements that the estimates were issued for illustrative purposes only and were not a guarantee of entitlement.

• It admitted that the errors were “more fundamental in that the underlying benefit calculation was wrong. Therefore, I can see how you might have placed some reliance on the incorrect information in arranging your financial affairs.”

8 CAS-80924-X8M9 • Although the Trustee agreed it had provided poor service to Mr T and the errors in the estimates represented maladministration, the £1,000 already paid was sufficient in compensation for the distress and inconvenience caused.

• The economic downturn and Mr T’s illness impacting his retirement planning could not be considered in determining whether he was entitled to compensation for financial loss.

• The fund’s transfer value increased by approximately £91,000 between June 2019 to Jan 2020, when he transferred out his benefits.

On 20 May 2021, Mr T appealed the stage one IDRP decision. He said in telephone calls to SCPF, he questioned what a reasonable margin of error could be expected to be acceptable for the caveat issued for illustrative purposes only and not guaranteed of entitlement. SCPF advised him that it would be reasonable for a few per cent and admitted that an error of this magnitude should not really be expected to be covered by this statement. He also emphasised again that he had telephoned SCPF in February 2015 to confirm that the 25% PSO had been debited. He referred to his complaint “falling under the equitable principle of estoppel”.

On 16 July 2021, SCPF wrote to Mr T with the Trustee’s response under stage two of the IDRP. The Trustee said:-

• It rejected Mr T’s appeal that he had incurred a financial loss or spent an extra £109,711 as a direct consequence of receiving the incorrect estimates.

• Mr T’s pension estimate for his NRD was £26,000 (including a supplementary pension of £4,600) in the May 2012 estimate. In the March 2015 estimates Mr T’s pension at NRD was £22,749.96 (including supplementary pension). Given that he was told that the 25% pension debit should have been deducted before he received the March 2015 estimate, the fact he was a deferred member, so not accruing any new benefits, and how actively he and his accountant managed his finances, suggested he should reasonably have identified the error.

• The primary cause of Mr T’s decision to spend rather than save was because he incorrectly calculated the pension he would be due at his NRD. He said to SCPF that he had expected a pension of £32,000 based on assuming a 3% pa growth added to the benefits in the incorrect estimates. However, the estimates were calculated with future increases up to NRD included. This led to him inflating his expected pension benefits by approximately £7,000 pa.

• Mr T was 52 years old in June 2019, the time he was notified of the errors made by SCPF. This was eight years before his NRD. This gave him a reasonable opportunity to reassess his financial plans before retirement, including increasing payments to his SIPP.

9 CAS-80924-X8M9 • The amount claimed was excessive and disproportionate to the size of the discrepancies between the erroneous estimates and Mr T’s actual pension entitlement.

• It admitted that a few per cent was reasonably expected to be covered by the “issued for illustrative purposes only” and “not a guarantee of entitlement” statements on the estimates, not a difference of 25%.

• There had been multiple errors in communication with Mr T, so the redress for non-financial injustice was increased to £2,000.

Following the complaint being referred to TPO, Mr T and the Trustee made further submissions that have been summarised below:-

The Scheme actuary re-calculated the corrected benefit estimates for March 2015 and March 2017 for Mr T’s pension at NRD (including supplementary pension from NRD to SPA). The projected pension benefits Mr T should have been told he was likely to receive from his NRD should have been approximately £19,400 pa (including approximately £3,400 pa from NRD to SPA). The Trustee says:

“It is difficult to reconcile on the one hand [Mr T]’s claim that his financial plans relied on a particular level of regular guaranteed income with his decision in December 2019 to transfer his SCPF benefits to a SIPP, thereby giving up his entitlement to any guaranteed income from the SCPF.”

Mr T says his decision to transfer his benefits out of the SCPF to his SIPP is irrelevant. He did so because the mistake made by SCPF had led him to a total loss of confidence in its ability to administer his pension.

Mr T says when he spoke with the Scheme Secretary on 16 June 2020, “the expectation of some recompense was ‘more or less’ given as the rationale behind the complaint (principle of estoppel) was all but agreed. If the conversation was recorded I think it would be worthwhile the Ombudsman getting a chance to listen to this discussion.”

The Trustee says it does not have a recording or full transcript of the telephone conversation with Mr T on 16 June 2020. It does not agree that any compensation was agreed to on the telephone call, referencing the telephone note from the conversation and an email to Mr T on 14 May 2020 which indicate that any such decision would be made based on information which it had not yet received.

The Trustee says the fact that some of Mr T’s claimed overspend was before March 2015, when the first incorrect estimate was sent, and some was after he was made aware of the errors in June 2019, raises concerns about the robustness of the process Mr T and his accountant used.

Mr T says the reason for some of his claimed overspend being from before the March 2015 estimates was because the 18 March 2015 estimate was wrongly dated 18 March 2014. 10 CAS-80924-X8M9 Summary of Mr T’s position:

Incorrect pension estimates were provided to him in March 2015 and March 2017.

Based on these, he anticipated the 2019 estimate to be a pension at NRD of over £26,000 pa, whereas it was approximately £19,700 pa.

Had he received the correct figures in March 2015 and March 2017, he would have changed spending habits (see Appendix) in anticipation of a lower pension at his NRD in 2027. He spent £109,711 which he would not have done had he been given the correct information in the March 2015 and March 2017 estimates. He would have paid more into his SIPP rather than spending this money had he not been provided with the erroneous estimates.

He estimated it would cost him between £115,000 and £150,000 to make up the shortfall in his expected pension fund at his NRD.

He was only notified of the errors in June 2019. This was too late to make up the shortfall (due to Covid, oil/gas industry decline and chronic illness). Had he been made aware in 2017 of the shortfall he could have altered his plans and finances accordingly.

The case falls under the equitable principle of estoppel.

Summary of the Trustee’s position:

There were errors in the two March 2015 estimates and the March 2017 estimate which meant Mr T’s projected pension at NRD was inflated.

Mr T had been paid £1,000 for the non-financial injustice and maladministration which it admitted had occurred. He had subsequently been offered a further £1,000 for non- financial injustice but had not accepted this offer.

The estimates were for Mr T’s income in retirement, but Mr T transferred the funds to a SIPP before his NRD.

Mr T experienced a loss of expectation not a financial loss.

There were warnings in the erroneous estimates that they were for illustrative purposes only and were not a guarantee of entitlement, although it admitted the difference in the figures was beyond what should be expected.

Mr T did not mitigate his loss when he was told about the errors in 2019, eight years before his NRD.

It cannot consider Mr T’s health, or the economic downturn, when considering any potential financial loss.

Mr T had miscalculated his projected pension income at NRD based on the erroneous estimate by incorrectly adding 3% pa. The increment was already taken into account in the projection. Mr T mistakenly overestimated his projected pension 11 CAS-80924-X8M9 by approximately £6,000 and this impacted his spending more than the actual errors. It was therefore not reasonable to assume his benefits would be over £26,000 pa by 2019.

Some of Mr T’s claimed overspend was before March 2015, when the first incorrect estimate was sent, and some was after he was made aware of the errors in June 2019. This raised concerns about the robustness of the process Mr T and his accountant used to calculate the claimed losses.

It is not possible to say the extra sums were spent in direct reasonable reliance of the incorrect information.

The amounts Mr T had claimed he overspent as a result of the erroneous estimates are excessive and disproportionate. Some of the expenses would have reasonably been incurred in any case, such as financial assistance to his children.

Although Mr T sought and received assurances from the Trustee that the PSO had been applied, the 25 February 2015 telephone call occurred before the incorrect estimates were sent to him. It should have been clear to him when he received the March 2015 estimates that an error had occurred because his projected pension at NRD did not decrease by 25% since the previous estimate, despite not having accrued any further pensionable service and being told of the 25% PSO deduction in the interim. He should have queried this again.

Adjudicator’s Opinion Mr T’s complaint was considered by one of our Adjudicators who concluded that no further action was required by the Trustee and that the Trustee’s offer of £2,000 in recognition of the distress and inconvenience caused was reasonable. The Adjudicator’s finding are set out below in paragraphs 65 to 90.

The Trustee agreed that there were multiple errors in communications with Mr T in relation to his pension. The most significant of these, and the crux of his complaint, were errors in the calculation of Mr T’s pension benefit estimates sent to him on 18 March 2015, 30 March 2015 and 2 March 2017, so there was no dispute that a problem had occurred. The effect of the mis-calculation was to falsely inflate Mr T’s estimated income from his NRD on these three occasions.

Mr T contended that the incorrect information he was sent in March 2015 and March 2017 had led to a shortfall in his expected income in retirement which will cost up to £150,000 to put right. Mr T says that as a direct consequence of the incorrect estimates, between May 2014 and December 2019 he spent £109,711 more than he would have spent had he received correct figures and instead of this expenditure he would have paid more into his SIPP. He said he should be compensated by the Trustee for this financial loss.

12 CAS-80924-X8M9 The Adjudicator explained that the provision of incorrect information, in and of itself, does not create an entitlement to incorrect benefits. The Trustee could only pay Mr T the pension benefits he is entitled to under the Scheme Rules. It could not pay the incorrect benefits, for instance, based on the estimates sent by SIL in March 2015 or March 2017. However, Mr T may receive redress if he sustained financial loss or suffered non-financial injustice as a consequence of being provided with incorrect information. Essentially, Mr T’s case was a complaint of negligent misstatement.

Any complaint of negligent misstatement must be based upon an inaccurate statement; referred to as a “representation”. The representation is usually in the form of spoken or written words, but can also be made by conduct. The representation must be a statement of past or present fact or, in certain circumstances, of the law. The representation must be clear and unequivocal.

If it can be shown that a clear and unequivocal representation has been made, the next question is whether the person to whom the representation has been made has relied on it to their detriment; that is, they have taken some action they would not otherwise have done. It is also necessary for them to be able to show that it was reasonable for them to have relied on the representation.

In terms of the issue of reliance on an inaccurate statement the Courts have indicated that a judge (or for that matter the Ombudsman) has to ask three questions:-

• Did the claimant rely on the statements?

• Was the reliance reasonable?

• Would the claimant have acted differently if they had been told the correct position?1

The Scheme actuary calculated that Mr T’s pension at NRD (including supplementary pension from NRD to SPA) was £19,400 pa. The erroneous figures provided to him in the March 2015 estimates were inflated by £3,349.96 pa (to £22,749.96 pa), a difference of £279.16 per month. The erroneous figures provided to him in the March 2017 estimate were inflated by £5,098.84 pa (to £24,498.84 pa), a difference of £424.90 per month.

Mr T said he attached significant weight to the reassurance that he said SIL specifically gave him during a telephone call on 25 February 2015 that the PSO had been taken into account. The Trustee did not dispute the call and the Adjudicator said he had no doubt that Mr T was told the PSO had been deducted at this time. SIL also reassured Mr T in writing on 15 August 2014 that the PSO had been taken into account at that stage, and that it would be reflected in any future pension benefit statements. However, the PSO was not included in the March 2015 or March 2017

1 Corsham v Police Commissioners for Essex [2019] 074 PBLR (042); [p2019] EWHC 1776 (Ch), Morgan J

at paragraph 173 13 CAS-80924-X8M9 estimates, which was the main cause of the miscalculation and the provision of misinformation.

The Trustee contended that because these reassurances were given to Mr T before he received the erroneous March 2015 estimates, the smaller than expected change in his projected pension since the May 2012 estimate, sent before the 25% debit should have been deducted, should have alerted him that there had been an error.

The Adjudicator noted that the May 2012 estimate misquoted Mr T’s NRD. This was the second time SIL had done so, having previously made the same error in the May 2004 correspondence. Since Mr T contacted SIL in 2007 to query this error, in the Adjudicator’s view it was reasonable to assume he was aware of his correct NRD by the time of the May 2012 estimate.

Both of the March 2015 estimates quoted Mr T’s pension payable from his NRD as £22,749.96, compared to £26,000 quoted in the May 2012 estimate, a reduction of 12.5 per cent. A comparison of the estimates from Mr T’s SPA, that is excluding the supplementary pension payable, was less straightforward. The 18 March 2015 estimate stated that £515.64 pa of the £22,749.96 pa was the supplementary pension. This would mean an increase in the estimated pension payable from SPA of £834.32 pa (or 3.9%) since the May 2012 estimate, from £21,400 (£26,000 - £4,600) to £22,234.32 (£22,749.96 - £515.64). However, the Trustee confirmed that the £515.64 figure was a typography error and should have been approximately £3,400. In the Adjudicator’s view, this error meant the Trustee’s contension that Mr T should have compared his post-SPA pension in the May 2012 estimate to the increased post-SPA amount stated in the 18 March 2015 estimate was unreasonable.

The 30 March 2015 estimate gave no breakdown of how much of the £22,749.96 pension payable at NRD was the supplementary pension. Again, the Trustee’s contention that Mr T should have used this estimate to compare his post-SPA pension benefits with the May 2012 estimate was, in the Adjudicator’s opinion, unreasonable.

Therefore, the Adjudicator only considered whether Mr T should have noticed that his estimated pension at NRD had decreased by only 12.5% between the May 2012 and the March 2015 estimates, rather than the 25.4% the Trustee had calculated it should have decreased by.

As well as the telephone conversation Mr T had with SIL on 25 February 2015 confirming 25% of his pension fund had been deducted since the previous estimate, he was also told in writing in August 2014 that this 25% amounted to £4,997.64 at that time. As a deferred member, he had not contributed to his pension in the time since his May 2012 estimate. In the Adjudicator’s view, Mr T or his accountant should therefore have noticed and queried why his estimated pension at NRD had decreased by just £3,250.04 in their meeting to discuss Mr T’s financial affairs in March 2015.

14 CAS-80924-X8M9 The Adjudicator’s view was that while the error was of course the fault of SIL, Mr T should have been aware there was an error. Had he made enquiries about the March 2015 estimated NRD pension being higher than he had been told to expect, with the PSO deduction included, the mistake would have been identified and corrected. For this reason, in the Adjudicator’s opinion, the Ombudsman would not uphold this aspect of the complaint.

Mr T transferred his funds in January 2020, before his NRD in 2027. The Adjudicator appreciated that Mr T would have been disappointed upon realising the estimates of projected pension income at retirement provided to him in March 2015 and March 2017 were wrong, but there was no evidence or claim from Mr T that he was provided with incorrect transfer values by SIL or the Trustee. The difference between the inflated estimated pension benefits provided and the correct figures did not represent a financial loss to Mr T because he was never entitled to the higher amounts. Rather, in the Adjudicator’s view, Mr T has suffered a loss of expectation.

The Adjudicator considered four of the 11 groups of expenditure Mr T had claimed financial loss for, including the three which he contended he should be paid 100% of in compensation; private medical insurance, purchasing a second car, and his wedding (getting married in Las Vegas – 60% claimed - and gifting £750 each to eight family and friends – 100% claimed).

The first of five private healthcare payments Mr T had claimed 100% of was £303.00 on 13 October 2014. This date was five months before he received the first erroneous estimate. It was clear therefore that he was already paying for private healthcare before March 2015.

Financial loss can only be considered when an applicant has spent their savings in reliance on receiving a higher misquoted amount and the expenditure is exceptional. In other words, the money had not been spent on something that Mr T would have bought anyway. The Adjudicator said that it was clear from the information Mr T had provided that he already had private healthcare insurance before the March 2015 estimates were received.

Mr T did not take out private healthcare as a consequence of relying on the misstatement from SIL. In the Adjudicator’s view, he would have acted in the same way had the estimates contained the correct information.

Of the £17,210.24 “Wedding 2019 Vegas General Costs”, £14,355.20 was incurred after the date he was made aware of the error in the estimates, 17 June 2019. Mr T made two payments, £1,665.04 on 17 April 2019 and £1,190 on 26 May 2019. He had not referred to attempting to mitigate the losses by attempting to change his plans or cancel the two payments which in the Adjudicator’s view would have been a reasonable action to take if he was concerned at this time about his lower pension.

15 CAS-80924-X8M9 The £6,000 gifts which Mr T was claiming 100% of were not included on the expenditure spreadsheet. However, in the Adjudicator’s view these gifts were also likely to be expenditure after 17 June 2019 since the spreadsheet indicated the wedding took place in September 2019. Again, the Ombudsman would expect an applicant to mitigate these losses and Mr T has not referred to any attempt to do so.

The first payment for the second car purchase was £4,000 on 1 September 2015, so Mr T contended that this car was purchased based on the March 2015 estimates and would not have been bought if the estimates had been correct. The total cost claimed for this car is £11,622. Mr T correctly says that his average monthly household spend of £7,500 at the time in question was over three times the national average. In the Adjudicator’s opinion, taking into account his usual spending, Mr T would not have been influenced by the erroneously stated extra £279.16 per month (March 2015 estimates) added to his projected monthly pension income to be paid from 2027 when he decided to make this purchase.

Mr T has included spending from before he received the 18 March 2015 estimate in his expenditure spreadsheet. He had explained that this was due to the estimate being incorrectly dated 18 March 2014. Excluding the expenditure from before 18 March 2015, Mr T said he spent £106,804.28 more than he would have had the estimates contained the correct pension benefits projections. This represented an average of £1,857.47 extra spent each month from 18 March 2015 to December 2019.

In the Adjudicator’s opinion, it was not reasonable for Mr T to contend that he spent an extra £1,857.47 per month for 58 months which he would otherwise have contributed to his SIPP, on the reliance of an extra £279.16 (March 2015 estimates) or an extra £424.90 (March 2017 estimate) in projected monthly pension income to be paid from 2027. The Adjudicator’s view, on the balance of probabilities, was that the errors in the pension estimates had not influenced Mr T’s spending decisions between 2015 and 2019, and Mr T would not have done anything differently if correct estimates had been provided.

The Adjudicator’s opinion was that Mr T’s complaint about misinformation leading to financial loss should not be upheld. He considered the £2,000 the Trustee has offered to Mr T for distress and inconvenience caused by its maladministration was consistent with the guidance issued by the Ombudsman on non-financial injustice.

Mr T did not accept the outcome of the Adjudicator’s Opinion, and the complaint was passed to me to consider. Mr T provided further submissions, which are set out below in paragraphs 92 to 97. I have considered these, but they do not change the outcome. I agree with the Adjudicator’s Opinion.

Mr T’s further submissions:

On 21 May 2004, SIL told him he could retire in 2017 at age 50. In 2007, SIL corrected this to 2027. 16 CAS-80924-X8M9 On 25 February 2015, during a telephone conversation with SIL, he asked whether the PSO had been applied and was told that it had been. This subsequently proved to be incorrect. In the ‘Background’ section of the Adjudicator’s Opinion it states that “Mr T says” he was reassured by SIL that the PSO had been deducted from his pension. The use of this phrasing suggests that the Trustee has not confirmed this conversation took place.

The 28 May 2012 estimate projected his pension at NRD to be £26,000 pa. However, three years later, on 18 March 2015, a subsequent estimate indicated a reduced amount of £22,749.96 pa. This reduction of approximately £3,250 led him to reasonably assume that the PSO had been applied. Furthermore, the 2 March 2017 estimate continued to show a figure below the 2012 projection, thereby reinforcing his belief that the PSO had been applied. From 2012 to 2017 the Retail Price Index (RPI) increased by approximately 13%. As his pension was index-linked it was not unreasonable to expect the pension estimate to increase from £26,000 to nearly £29,380 over that five-year period. So, the subsequent reduction to £24,498.84 pa represented a decrease of £4,881.16, if RPI is considered. It was not therefore remiss to assume that this reduction reflected the 25% PSO deduction, particularly as he had been informed it had been applied.

The absence of any recording of the 16 June 2020 telephone call is notably convenient and should be investigated further.

On 18 March 2015, he was sent an estimate that was inaccurate and erroneously dated 18 March 2014. He used this estimate to make important financial planning decisions. The Trustee’s comment that evidence of his spending prior to the initial incorrect estimate dated 18 March 2015 raised concerns about the robustness of the process undertaken by he and his accountant is unfounded. He intentionally included this additional evidence in order to correspond with the erroneous date stated on the 18 March 2015 estimate.

He is willing to negotiate a lower amount for financial loss than he initially claimed as the return on annuities has improved since his initial complaint to SIL.

The Trustee subsequently confirmed to the Adjudicator that SIL do not currently record telephone calls and did not do so during the period in question in this complaint, so there is no recording of any telephone conversation with Mr T.

Ombudsman’s decision Mr T has complained that his NRD was misquoted in a letter from the Trustee dated 21 May 2004. I can see that the Adjudicator addressed this, but applications to TPO need to be made within three years of when the event(s) complained about happened or, if later, within three years of when the applicant first knew about it (or ought to have known about it). Mr T’s application to TPO was received in November 2021, so this specific complaint point is outside of my jurisdiction.

17 CAS-80924-X8M9 SIL has not been able to provide any telephone note to evidence the conversation that took place between Mr T and SIL on 25 February 2015. As the Background section of the Opinion must present only established facts without interpretation, the absence of such evidence necessitated the phrasing “Mr T says he contacted SIL by telephone and was reassured that the PSO had been deducted from his pension” rather than the more definitive “Mr T contacted SIL by telephone and was reassured that the PSO had been deducted from his pension”. However, in the ‘Findings’ section, the Adjudicator expressed his view that, in addition to SIL’s written confirmation of 15 August 2014 incorrectly stating that the PSO had been applied, SIL also gave the same incorrect assurance during the telephone conversation on 25 February 2015. I agree with the Adjudicator and find that this conversation did take place.

In light of the letter from SIL to Mr T dated 15 August 2014, which informed him that the PSO would reduce his pension by £4,997.64 pa, and the subsequent conversation he had with SIL on 25 February 2015, where he was told the PSO deduction had now been implemented, a significant and immediate reduction in his projected NRD pension around this time would reasonably have been anticipated. The absence of any such reduction, particularly one approaching £4,997.64, over the following months and years ought to have alerted Mr T to a potential issue. This is especially relevant given that Mr T has consistently emphasised that all his financial planning is undertaken in consultation with his long-term accountant, with whom he met specifically to review his future financial planning on 18 March 2015, the date he received an estimate.

Mr T’s submissions regarding his estimate of the RPI revalued benefits he expected to receive is not material to his complaint. This is because those submissions relate to whether it was reasonable for him to rely on the incorrect information. However, the Trustee has accepted that he did reasonably rely on the incorrect information, so it remains for me to consider whether Mr T would have acted differently if he had been provided with the correct information.

Mr T’s accountant stated that Mr T’s company had significant cash reserves in the two years prior to its winding up in March 2016 – funds which he has said Mr T could have used to make additional contributions to his SIPP had he been aware that the pension estimates were overstated. When the company was wound up, it had cash reserves in excess of £275,000. I also note that Mr T transferred his SCPF benefits, valued at £475,185.55 at the time, to his SIPP in January 2020.

Mr T says that between 2015 and 2019 his average monthly household expenditure was £7,500.

In light of his established spending patterns and the financial resources available to him at the times the erroneous pension estimates were provided to him, it is not credible to suggest that Mr T would have been influenced in his purchasing decisions by an inflated projected pension of £279.16, or even £424.90, per month, potentially payable in twelve or ten years’ time. The difference between the correct and incorrect 18 CAS-80924-X8M9 figures is comparitively small when set against the level of funds Mr T had available to him. I therefore do not consider that, had Mr T been provided with correct pension estimates in March 2015 and March 2017, he would have acted differently than he did.

Mr T’s decision to transfer his funds from his defined benefit pension to his SIPP in January 2020 further indicates that he was not reliant on receiving a specific level of pension income in 2027. In transferring his benefits to the SIPP, he relinquished the defined-benefit promise associated with his SCPF pension, his future retirement income therefore became variable.

Mr T has highlighted that the 18 March 2015 estimate was incorrectly dated. This issue was noted in the Adjudicator’s Opinion, where Mr T’s explanation for providing details of extra expenditure from 18 March 2014, rather than from 18 March 2015, was accepted. The Adjudicator made no specific findings in relation to the Trustee’s assertion that the submission of this additional expenditure undermined the credibility of the methodology used by Mr T and his accountant. I acknowledge that Mr T did not appreciate the tone of the Trustee’s comment questioning the robustness of the process that he and his accountant used to calculate the claimed losses based on these dates. However, in light of the Adjudicator’s acceptance of Mr T’s explanation, I consider that this matter requires no further investigation.

Mr T says the lack of a recording of his telephone conversation with the Scheme Secretary on 16 June 2020 is convenient for the Trustee and warrants further investigation. The Trustee has confirmed that, in accordance with SIL’s policy, telephone calls were not recorded. So, I am only able to compare Mr T’s recollection of that call with the contemporaneous telephone note taken by the Scheme Secretary.

While I do not doubt Mr T’s recollection of the 16 June 2020 conversation, it differs to the telephone note, which states that Mr T was provided with detailed guidance on the information required to demonstrate financial loss and was informed that a decision on his complaint would be made once the necessary documentation was received.

Mr T maintains that he was led to believe during this conversation that he should “more or less” expect some compensation. Had he been given an indication at that time of the likely outcome of the complaint, such a view would have been formed before Mr T had submitted the relevant documentation to SIL – the basis on which any the subsequent decision would be made. At the time of the telephone call, no decision had been taken, and the Scheme Secretary was not in a position to determine the outcome of the complaint. So, the lack of this telephone recording is not central to deciding whether Mr T’s complaint should be upheld.

I agree with the Adjudicator’s reasoning as set out above in paragraphs 65 to 90.

I do not uphold Mr T’s complaint, and no further action is required by the Trustee.

19 CAS-80924-X8M9 Should Mr T now wish to accept the Trustee’s offer of a further £1,000 for non- financial loss, he should contact the Trustee directly.

Camilla Barry Deputy Pensions Ombudsman 18 December 2025

20 CAS-80924-X8M9 Appendix Mr T’s email to the Trustee dated 27 July 2020.

As relevant, Mr T said:

“Many thanks for your patience. Since our discussion over 5 weeks ago I have finally sourced, collated and checked through the 4 different accounts, namely;

• [Personal account 1]

• [Credit Card 1]

• [Personal Account 2]

• [Credit Card 2]

Almost 10,000 transactions have been reviewed, categorised and assessed to decide if they are applicable. I have concluded that just over 650 transactions (less than 7% of transactions) are being presented for consideration in accordance with our thoughts when discussing this. Sincere apologies for the delay but as mentioned the [Credit Card 1] was closed in March and they had omitted some statements that took a while coming after reordering.

For some background to put things into perspective, please could I provide the following headline overview;

1. Over the period, circa £1.197 million passed through my main personal current account ([Personal account 1).

2. Stripping back approximately £700,000 of house / property / investment / savings related transactions which involved moving cash from one account to another or to solicitors/banks etc, this leaves a remaining circa £490,000 general spend, in addition I had approx. £50,000 of mortgage payments from the [Personal account 2] taking it to circa £540,000 which calculates out at my average monthly spend to be approximately £7,500 per calendar month. (According to the [Office for National Statistics] the average household spend 2019 was approx. £2300 pcm)

3. This claim amounts to a total sum of £109,711 which I feel I would not have spent had I known about the shortfall in my pension, to put it in context this works out at a percentage of only circa 8% of my overall non-adjusted spend, 20% of ‘household’ spend, and approx 50% of the value of the 650 applicable transaction spend over the time period (that are detailed in the accompanying spreadsheet) – this claim relates to the criteria “Did you suffer a loss as a result of relying on the inaccurate information, in particular, would you have acted differently with the correct information” – This I hope can be assessed from my submission as an honest, conservative and realistic assessment, in reality I think it could be considerably more than this.

21 CAS-80924-X8M9 4. Over the past several years retiring or at least semi-retiring has been utmost in my mind with the hope of being able to spend as long as I can in retirement whilst still relatively healthy, unfortunately I was diagnosed several years ago with a chronic disease called Pemphigus, it is controlled with steroids but may worsen with age, however on a positive note, apparently it may also improve with a quieter life in retirement! My retirement plans had been based upon the expectation of the pension I thought I would get at the age of 60 and my plans thus far were firmly based around that expectation as my accountant has verified previously.

5. Please could you also consider this in conjunction with previously submitted information including the … Accountants report.

6. For your information [my] Accountants have also reviewed and suggested amendments to this email and its spreadsheet attachment and are happy/willing to provide any specifics requiring more detail if/as requested.

As agreed, I have reviewed all spending over the period going through every transaction I have made for each of the 4 accounts. I have then decided if any cost was fixed or irrelevant and removed them, I have categorised or grouped individual transactions over the period into a small number of groups, (as tabulated below), that I considered were applicable to the claim. Each individual transaction, date, account, amount and transaction has also been listed in the accompanying spreadsheet for total clarity.

Each transaction can be backed up with original bank statements as promised/agreed. In the overview table at the top of the spreadsheet, each category spend has been summated and a percentage applied to that category – the percentage detailed is the percentage I conservatively and honestly feel is reasonable to say that I would not have spent had I known the pension situation and that money spent is irretrievable for me.

For example, for the ‘PETROL’ category I think it is reasonable to say that I would have saved 40% of the actual total had I had a more mainstream car (the M4 did about 24MPG! – most cars now do 40MPG+), which I would have had, had I known of the pension shortfall. My Accountant has mentioned that he is happy to go on the record to state that his recollection that I always used to drive old high mileage BMW’s ‘for years’ and took satisfaction on the money I saved, and that he specifically recalls the BMW M4 being the first new car I had bought.

Another example I would like to detail further is the wedding we had in Vegas (by yes you guessed it, Elvis at the Graceland Chapel!) – both [my wife] and I had been previously married so this was a second wedding – deliberately small and intimate with only our children, their partners, my best friend and [my wife’s] sister & Husband (10 guests in total plus ourselves). We decided that we only live once and to treat everybody to an amazing experience in Vegas topped with an amazing holiday would be a memory of a lifetime, very expensive but we thought we could afford the excess. If we had known about the shortfall we would have had a UK based wedding, perhaps with double the guests at most (say 20) but statistics suggest the average UK wedding is circa £16k to £18k with average

22 CAS-80924-X8M9 of 80 to 100 guests – taking that as a guide we could reasonably have expected to have spent no more than £5k in total on a great wedding in the UK.

I think I have been honest, logical, pragmatic and reasonable in each of the category assessments but of course am totally open to discussion on all aspects.

For fairness, clarity and total transparency, I have NOT included any portion of the claim against spend for transactions/categories that are as listed below;

• Mortgage related payments (Circa £50k) Not Considered applicable for this claim

• Bills such as utilities, council tax, phones, internet, TV licence etc. Not Considered applicable for this claim

• Personal insurance or home insurance or appliance insurances etc. Not Considered applicable for this claim

• Any CASH purchases – I historically have used cash for a lot of my day to day purchases, regularly drawing £200 or £300 from cash machines and rarely obtaining receipts for goods - therefore any cash purchases have not, will not and cannot be included in this claim (this equates to £39,350 over the period) Not Considered applicable for this claim

• Expenditure on house or garden, such as repairs, improvements, renovation etc Not Considered applicable for this claim

• Sky TV (the sum paid for Sky TV over the period was circa £4,900) Not Considered applicable for this claim

• Any sums transferred to my 2 sons under the amount of £500 (transfers under £500 equated to almost £9,000 notwithstanding any cash amounts) Not Considered applicable for this claim

• Expenditure on furniture, appliances, replacements, personal electronic and computer equipment Not Considered applicable for this claim

• Personal expenditure for myself such as clothes, personal effects, gadgets, Not Considered applicable for this claim

• Expenditure on anything that I still have the value of such as, for example, a watch I may have purchased for myself Not Considered applicable for this claim

• Legal, professional or accountancy costs Not Considered applicable for this claim

• ANY expenditure on Amazon (likely to my detriment in relation to the claim but accepted) Not Considered applicable for this claim

• ANY expenditure/transactions on Ebay/PayPal (likely to my detriment in relation to the claim but accepted) Not Considered applicable for this claim

23  CAS-80924-X8M9 • Any work related expenditure – I have made a deliberate decision NOT to include any [Credit Card 2] transactions as I would estimate that 80% to 90% of [Credit Card 2] usage is for work related purposes and to avoid any confusion or doubt I concluded it best to remove any [Credit Card 2] transactions totally. Not Considered applicable for this claim

• Any day to day expenditure that could be reasonably argued to be normal everyday costs. Not Considered applicable for this claim

I HAVE included the following categories of transactions and include a brief description of each category which is colour coded on the attached supporting spreadsheet of individual transactions by date/account; % OF AMOUNT Total EXPENDITURE DESCRIPTION CATEGORY RATIONALE/COMMENTS CLAIMED CLAIMED

Financial assistance to my 2 sons, including general financial help with university, accommodation, cars - day to day help from teenage years through £29,650 40% BOYS to their 20's

(NOTE: For fairness I have only included individual transfers of £500 and above – amounts of below £500 amount to at least £9000 but are £11,860 2 SONS - FINANCIAL HELP excluded) 1st Car is a new performance car purchased in 2015 new - a more reasonable car £60,796 40% 1st CAR BMW would have been purchased, probably 2nd hand/used large engine diesel with better MPG £24,318 CAR - BMW NEW M4 I would not have had a £11,622 100% 2nd CAR second car that is £11,622 CAR - 2nd CAR definite I had help with house and garden, I would not have had all of the help GARDEN/HOME but think 50% is a £5,388 50% reasonable assessment HELP – NOTE: I no longer have any now except Green thumb lawncare £2,694 NESSA/LEWIS/GREEN THUMB (help house/garden) 5 times/year at £36/visit

24  CAS-80924-X8M9 Would not have had wedding in USA, would £6,000 100% £6,000 WEDDING 2019 £750 gifted to each child/partner WEDDING have been in UK towards Vegas travel/hotel (x 5 kids + 3 partners = 8 therefore this cost would not have been total) incurred at all. As discussed in email, I planned an extravagant wedding/honeymoon including paying for children and their £17,210 60% WEDDING partners flights/travel/hotels which would have been a modest UK small wedding costing £10,326 WEDDING 2019 Vegas General Costs perhaps £5k This category includes hotels, holidays, holiday travel, holiday accommodation, dining £32,557 50% HART out etc. – this would have been very much curtailed – a 50% claim is I think very HOLIDAY/ACCOMODATION/RESTAURANT/TRAVEL reasonable. £16,279 (H-A-R-T) This category includes for gifts purchased for and gifted to others, includes jewellery and £21,348 80% GIFT specific gifts and could not be asked for back from them – only large item cost gifts included £17,078 GIFT GIVEN TO 3rd PARTY for consideration I had medical issue (Pemphigus) and would PRIVATE not have paid private £1,138 100% £1,138 PRIVATE HEALTH HOSPITAL COSTS consultations had I HEALTH known about pension shortfall.

Car insurances for 1st & 2nd Car (ist car insurance cost would have been less than a £6,947 50% £3,473 BMW M4 and 2nd car insurance would not have been incurred as I wouldn’t have had a CAR INSURANCES INSURANCE 2nd car) All personal fuel costs have been tabulated in consideration of the relatively high amount £12,306 40% PETROL of fuel used by the high performance car – please see note in this £4,923 PETROL FUEL COSTS email.

£204,962 Totals £109,711

...”

25