Ombudsman rules Friends Life did not misinform client

The Pensions Ombudsman has rejected a complaint raised by a client in a Friends Life pension scheme that accused the insurer of providing misleading information over the default fund investment.

The complainant, referred to in the Ombudsman’s decision as Mr Evans, is a member of the occupational pension scheme of his former employer, 3M UK Plc.

According to the decision, Mr Evans signed up to the scheme’s additional voluntary contributions facility in December 2007. He was at this point 57 and had decided to retire early at 60, ahead of the scheme’s default retirement age of 65. He eventually retired in February 2009.

Mr Evans initially signed up to pay £3,000 a month into the scheme, and between April 2008 and February 2009 invested some £44,200 in AVCs.

He complained to the Ombudsman due to a decline in value of the funds after receiving his income quotes in December 2008 and January 2009, saying that he had been invested in funds that were inappropriate for his circumstances because they were not cautious enough.

The Ombudsman said that Mr Evans referenced a conversation in which he was encouraged by a representative of Winterthur Life, which managed the scheme before it transferred to Friends Life, had told him to select the ‘lifestyle’ funds option.

Friends Life responded to the Ombudsman saying that Aon, the scheme administrators, had not informed it of the change in retirement age until January 2009 and that it had therefore invested the funds in an appropriate fashion for an individual eight years from retirement.

Aon itself said that it had not received completed documentation from his company of the early retirement date until January 2009.

The Ombudsman rejected Mr Evans’ assertion that he had told the Winterthur representative of his retirement plans as there was no documented evidence of this conversation.

It also noted that the representative would have been “beyond her remit” to advise Mr Evans on which default fund option to select, but that similarly no evidence exists to prove this.

The decision states: “Unfortunately, Mr Evans had expectations of Friends Provident that they could not fulfil.

“He is right that his AVCs were not invested as cautiously as they might have been for someone with only a year or two before retirement. But the investment decision was his and it was for him to tell Friends Life clearly what his retirement plans were.”

Friends Life has offered to pay Mr Evans £100 as a “goodwill gesture”.