Scottish Widows Executive Pension Plan · CAS-124815-S6D7

CAS-124815-S6D7

Ombudsman’s Determination Applicant Ms N

Scheme Scottish Widows Executive Pension Plan (the Plan)

Respondent “S” Ltd

Complaint Summary Ms N has complained that S Ltd unreasonably delayed the transfer of her pension benefits, which were held in an individual policy (the Policy) under the Plan. Ms N said the delay caused her an investment loss and prevented her from drawing from her benefits.

Summary of the Ombudsman’s Determination and reasons The complaint is upheld because S Ltd has not presented any legal basis on which it was able to deny the transfer of Ms N’s benefits, nor has it given a reasonable explanation for the delay.

Detailed Determination Material facts

The sequence of events is not in dispute, so I have only set out the main points. I acknowledge that there were other exchanges of information between the parties.

The Plan is an executive pension plan. S Ltd is the trustee of the Plan and was the legal owner of the Policy, which was administered by Scottish Widows. Mr N is the director of S Ltd and is also Ms N’s ex-husband.

On 21 February 2006, Mr N, on behalf of S Ltd, completed and signed a transfer information form to request a quotation for a transfer of benefits into the Plan (the Transfer Information Form). The Transfer Information Form set out that Ms N entered into pensionable service in June 2000. The value of the benefits to be transferred was recorded as £5,809.31.

1 CAS-124815-S6D7 On 24 March 2006, S Ltd wrote to Scottish Widows to confirm that the benefits held with Scottish Mutual, in respect of Ms N, were to be transferred into the Policy (the March 2006 Letter). The letter was signed by Mr N in his capacity as trustee of the ceding pension arrangement. The monies were “to be applied to [Ms N’s] policy”.

On 29 March 2006, Allied Luptons Ltd (Allied Luptons), an independent financial advisor, wrote to Scottish Widows. It enclosed the Transfer Information Form, which it said had been completed by Mr N, and a copy of the March 2006 Letter.

On 3 April 2006, Scottish Widows received the correspondence from Allied Luptons, dated 29 March 2006.

On 10 June 2022, Ms N completed a ‘leaving pensionable service form’ for the Policy. This indicated her wish to transfer the benefits in the Policy to a scheme administered by AJ Bell. The value of the benefits was given as £11,689.88.

On 1 November 2022, Scottish Widows issued a summary for the Policy. The total value of the benefits, as at 1 November 2022, was quoted as £11,166.56.

On 18 February 2023, Scottish Widows issued a summary for the Policy. This stated that total contributions paid to that point were £5,809.30 and this was a through single transfer payment, dated 3 April 2006. The total value of the benefits in the Policy, as at 18 February 2023, was quoted as £12,283.54.

On 2 August 2023, Ms N completed a new ‘leaving pensionable service form’ for the Policy. This indicated her wish to transfer the benefits to a scheme administered by Interactive Investor.

On 3 August 2023, the leaving pensionable service form was forwarded to S Ltd’s legal representative and a request was made that S Ltd give authority for the transfer to proceed. The value of the benefits in the Policy as at this date was £11,770.25.

On 13 November 2024 (the Authorisation Date), Mr N on behalf of S Ltd, submitted a signed transfer form for the Policy to Scottish Widows. This provided the necessary trustee authority for the transfer of Ms N’s benefits

On 27 February 2025, Scottish Widows transferred £13,851.62 to Ms N’s Interactive Investor SIPP.

Summary of Ms N’s position

2 CAS-124815-S6D7 In the months following the transfer of her benefits to her Interactive Investor SIPP, and the drawing of her tax-free lump sum, she made a number of share and foreign currency trades. She has submitted details of these investments in support of her claim for redress for her alleged financial loss.

Summary of S Ltd’s position

It has been offered the opportunity to set out the legal basis on which it took its original position that Ms N, or any other party, fraudulently established the Policy in Ms N’s beneficial interest. No further explanation, or details of legal advice obtained, was submitted for consideration.

Preliminary Decision

Conclusions

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Directions

Dominic Harris Pensions Ombudsman 26 May 2025

5 CAS-124815-S6D7 Appendix 1 – Extracts from The Occupational Pension Schemes (Transfer Values) Regulations 1996 “1 Citation, commencement and interpretation…

(2) In these Regulations, unless the context otherwise requires—

…“appropriate date” has the meaning given to that expression in section 97(3A) of the 1993 Act…

…7C Manner of calculation of initial cash equivalents for money purchase benefits (other than collective money purchase benefits) and cash balance benefits not calculated by reference to final salary

(1) For cash balance benefits in respect of which the available sum is not calculated by reference to final salary and money purchase benefits other than collective money purchase benefits, the initial cash equivalent is to be calculated in accordance with this regulation.

(2) The initial cash equivalent is the realisable value at the date of calculation of any benefits to which the member is entitled.

(3) The trustees must calculate that realisable value—

(a) in accordance with the scheme rules; and

(b) in a manner which is—

(i) approved by the trustees; and

(ii) consistent with Chapter 1 of Part 4ZA of the 1993 Act.

(4) The realisable value must include—

(a) for money purchase benefits, any increases to the benefits resulting from a payment of interest made in accordance with the scheme rules; or

(b) for cash balance benefits—

(i) any interest (including notional interest) which, in accordance with the scheme rules, applies to the available sum in respect of which the benefits are calculated;

(ii) any guarantee which, in accordance with the scheme rules, applies to the available sum in respect of the benefits or to the contributions made by the member or by another person in respect of the member;

(iii) any options the member has which would increase the value of the member's benefits under the scheme (adjusted to reflect the proportion of members the trustees determine are likely to exercise those options); and

6 CAS-124815-S6D7 (iv) any discretionary benefits which the trustees determine should be taken into account, having regard to any established custom for awarding the benefits and any requirement for consent before they are awarded…

…10 Increases of cash equivalents on late payment

(1) Subject to paragraph (2), if the trustees of a scheme, having received an application under section 95 of the 1993 Act, fail to do what is needed to carry out what the member requires within six months of the appropriate date the member's cash equivalent, as calculated in accordance with regulations 7 to 9, shall be increased by the amount, if any, by which that cash equivalent falls short of what it would have been if the appropriate date had been the date on which the trustees carry out what the member requires.

(2) If the trustees of a scheme, having received an application under section 95 of the 1993 Act, fail without reasonable excuse to do what is needed to carry out what the member requires within six months of the appropriate date the member's cash equivalent, as calculated in accordance with regulations 7 to 9, shall be increased by—

(a) interest on that cash equivalent calculated on a daily basis over the period from the appropriate date to the date on which the trustees carry out what the member requires, at an annual rate of one per cent. above base rate; or, if it is greater,

(b) the amount, if any, by which that cash equivalent falls short of what it would have been if the appropriate date had been the date on which the trustees carry out what the member requires.”

7 CAS-124815-S6D7 Appendix 2 – Extracts from the Pension Schemes Act 1993 “95 Ways of taking right to cash equivalent

(1) A member of a pension scheme who has acquired a right to take a cash equivalent in accordance with this Chapter may only take it by making an application in writing to the trustees or managers of the scheme requiring them to use the cash equivalent in one of the ways specified below…

…(9) An application to the trustees or managers of the scheme under subsection (1) is to be taken to have been made if it is delivered to them personally, or sent by post in a registered letter or by the recorded delivery service…

…97 Calculation of cash equivalents

(1) Cash equivalents are to be calculated and verified —

(a) in the prescribed manner, and

(b) where a designation has been made under section 97A or 97B, in accordance with regulations under section 97C.

(1A) Where a member applies under section 95 to take a cash equivalent that relates to money purchase benefits, the cash equivalent is to be calculated by reference to the date of the application.

(2) Regulations may provide—

(a) that in calculating cash equivalents that relate to money purchase benefits account shall be taken—

(i) of any surrender, commutation or forfeiture of the whole or part of a member's pension which occurs before the trustees or managers of the scheme of which he is a member do what is needed to comply with what he requires under section 95;

(ii) in a case where subsection (2) of section 96 applies, of the need to deduct an appropriate amount to provide for the liabilities mentioned in subsection (3) of that section;

(aa) for a cash equivalent that relates to any category of benefits to be reduced so as to take account of the extent (if any) to which an entitlement has arisen under the scheme to the present payment of the whole or any part of—

(i) any pension; or

(ii) any benefit in lieu of pension;

and

8 CAS-124815-S6D7 (b) that in prescribed circumstances a cash equivalent shall be increased or reduced

(3) Without prejudice to the generality of subsection (2), the circumstances that may be specified by virtue of paragraph (b) of that subsection include—

(b) failure by the trustees or managers of the scheme to do what is needed to carry out what a member of the scheme requires within 6 months of the appropriate date; and

(c) the state of the funding of the scheme.

(3ZA) Where, in the case of an application from a member under section 95 that relates to money purchase benefits that are collective money purchase benefits, regulations under section 99(2)(c) provide for a period longer than 6 months, subsection (3)(b) is to be read as if the reference to 6 months were a reference to that longer period.

(3A) For the purposes of subsection (3), the “appropriate date” —

(a) in relation to a cash equivalent that relates to benefits other than money purchase benefits, means the guarantee date for the purposes of the relevant statement of entitlement under section 93A, and

(b) in relation to a cash equivalent that relates to money purchase benefits, means the date on which the trustees or managers receive an application from the member under section 95.”

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