The trustee of the Jaguar Pension Plan, and its administrator Mercer, have been ordered to compensate a member who retired on the basis of incorrect information about his pension.
On June 27, former Pensions Ombudsman Antony Arter partly upheld the complaint of Mr R, a former technical specialist at Jaguar Land Rover, against the trustee and Mercer.
Mr R applied for voluntary redundancy in March 2019 after the company launched a voluntary redundancy programme in January that year.
He complained that he had relied upon incorrect figures when taking the decision to retire early. He asked for either the Jaguar trustee or Mercer to make up the income shortfall between his incorrect and correct quotes.
There were a series of administrative errors on the part of the trustee and Mercer
Anthony Arter, former Pensions Ombudsman
Mr R also slammed JLT Benefit Solutions’ — now a part of Mercer — handling of the matter.
The trustee will pay Mr R £1,000 for distress and inconvenience, while Mercer will pay £2,000 “in recognition of the severe distress and inconvenience caused to him by its appalling repeated failings,” the ruling said.
The ombudsman, however, dismissed Mr R’s claims based on the principles of “negligible misstatement” and “estoppel”.
A ‘conveniently forgotten’ phone call
Shortly after enquiring about voluntary redundancy, on January 18 2019 Mr R said that he was told by JLT that he would be entitled to an annual pension of £19,904, or £14,103 plus a cash lump sum of £94,032.
JLT said that it did not have any record of this call. Later that month, the administrator told Mr R that it was not able to provide him with requested information about his pension entitlement. Mr R then confirmed his entitlement in a phone call to JLT. A letter in April 2019 would also include the £19,904 quotation.
In March, Mr R’s voluntary redundancy application was approved. In June 2019, he asked JLT to estimate his pension entitlement in the event he took a £33,000 lump sum and an annual pension of £22,000.
JLT subsequently told Mr R in July that it was unable to settle his benefits for backdated retirement as at April 8 2019. In August, it then notified him of an error in the calculation linked to his two transferred-in pensions.
Mr R formally complained to JLT on October 8 2019. His primary complaints included “loss of expectation”, mismanagement and delay, incorrect information and poor management of transferred-in pensions. JLT’s pensions manager upheld his complaint.
He then met with a JLT managing director and received a list of retirement options on January 6 2020, which were lower than the estimates received in January 2019. On the same day, he pursued a JLT representative for a compensation offer, as it was agreed in their meeting that this day was the deadline.
Mr R said that he did not hear back until January 9, when he was informed that the JLT representative could not make their scheduled meeting on January 10, but that this would be rescheduled for the following week. This meeting was never rescheduled, according to Mr R.
On February 6 2020, Mr R’s lawyers told JLT that they would pursue damages over having provided Mr R with false pension rights figures on January 18 2019.
Mr R had relied on these figures in deciding whether to accept redundancy, they said. They observed that Mr R’s final pension figures provided on January 6 2020 appeared to be “grossly less”.
JLT responded that it had no record of the January 18 2019 estimate. On February 4 2019, a full pension quotation of £19,904 had, however, been produced.
This had been overstated due to the inaccurate calculation linked to the two transfers-in received. A revised quotation was issued on August 9 2019, outlining Mr R’s real entitlement to a full annual pension of £16,196 — or a reduced pension of £11,493 plus tax-free cash.
Mr R was told that he would need to show evidence of financial loss, “having reasonably relied upon the overstated quotation”.
In June 2020, Mr R subsequently submitted a second complaint, the upholding of his first complaint having been overturned.
This was rejected in July, the trustee’s reasoning including that Mr R would have to prove that he had relied on the quotations provided, that he would have acted differently with the correct information, and that he had suffered financial loss as a result.
In response, Mr R said that his January 18 2019 call with the company had been “conveniently forgotten”.
‘A series of administrative errors’
The adjudicator considered the legal principles of negligent misstatement and estoppel — the latter of which prevents an individual from going back on their word when having agreed facts with another party, and that second party has relied upon those facts — when weighing up Mr R’s case. It also ruled on whether there had been “maladministration”.
It sided with Mr R that he had been provided with a £19,904 estimate for his pension entitlement. “It was more than likely that Mr R was provided with incorrect information,” it said, adding that JLT and the trustee had consistently provided the correct figure from January 2020.
The trustee could also not rely upon its defence that it had provided its information in February using its BenPal system, which is accompanied by caveats that quotations were an estimate of benefits only, and that clarification should be sought on the extent to which they could change, should these figures be used for significant financial decisions.
The adjudicator did, however, take the view that Mr R should have raised concerns over the difference in figures quoted to him, having been given a substantially lower annual estimate of £11,962 in his April 2018 statement. On these grounds it ruled out negligent misstatement.
On the grounds that Mr R’s pensions estimates were not promises, they did not satisfy the criteria for an estoppel defence.
The adjudicator did rule that maladministration had taken place. It acknowledged that Mr R had been provided with incorrect information between February and August 2019.
“This would have caused a high degree of confusion at a time when he was keen to follow through on taking redundancy and an early pension,” it said, adding that the reversal of Mr R’s complaint was “not helpful”.
Waiting times a problem as demand for Pensions Ombudsman rises
The Pensions Ombudsman has been successful in its application for additional funding, part of which will go towards establishing its new pensions dishonesty unit, and tackling customer waiting times as demand is expected to rise by at least 10 per cent over the next year.
“There were a series of administrative errors on the part of the trustee and Mercer, such as misquoted information, misrepresentation and poor complaint handling, which ought to be recognised and redressed,” the adjudicator concluded.
The trustee and Mercer accepted the adjudicator’s opinion, but Mr R did not. The case was passed on to the ombudsman, who sided with the adjudicator.
The ombudsman opted to increase Mercer’s payout, originally mandated by the adjudicator, from £1,500 to £2,000, “in respect of the woefully inadequate service provided” by the administrator.
