Ombudsman upholds complaint against LGPS despite predator warning

T

he saver, referred to as Mrs H, complained that the Council failed to carry out proper due diligence before it transferred her benefits from the fund to the Focusplay Retirement Benefits Scheme. Mrs H is concerned that her entire pension fund may have been lost or misappropriated.

The scheme had received a declaration from Mrs H that she had read a leaflet from the Pensions Advisory Service reading: “Predators stalk your pension …. It is my responsibility to ensure the benefits the transfer value buys in the new scheme are suitable for me and my family and that no responsibility for this rests with the [Fund], the LGPS or my former employer.”

However, in the determination the Pensions Ombudsman, Anthony Arter, said the council had discretion as to whether to implement the transfer.

He noted: “The employer running the scheme was based several hundred miles away. Also the scheme was recently established. In that situation one would have expected the Council to make an attempt, by phone or email, to explain its concerns to Mrs H and to point out the possibility that the scheme could be a scam. Unfortunately it failed to contact her at all and quickly processed the transfer request as though it had no choice in the matter.”

He concluded: “the Council’s actions constitute maladministration, falling below the standard required of a prudent pension provider.”

To put matters right, the Pensions Ombudsman required the council to reinstate the woman’s accrued benefits, or provide equivalent benefits, adjusting for any revaluation that has arisen since the transfer and allowing for any lump sum that she has already received.

To avoid “double counting”, the council can recover any of her remaining pension that they are able to retrieve from the Focusplay scheme. Hampshire was also directed to pay Mrs H £500 to reflect the distress and inconvenience that she suffered.