Pension scheme trustee NM Pensions, part of the LV group, has been ordered by the Pensions Ombudsman to reconsider its decision to refuse to pay a £100,000 lump sum death benefit to a husband after the family of his former spouse claimed the couple had been set to divorce.
Ombudsman Tony King said the decision not to pay the sum to Barry Gooch, who was the named beneficiary on the policy, was based on “unsubstantiated” hearsay and a number of allegations.
Mr King also criticised the firm for falling to disclose reasons for the decision to Mr Gooch and said NM had even initially refused to disclose details following ombudsman enquiries, before eventually supplying a “heavily redacted” and incomplete response.
In reconsidering the case the company must disregard the fact that the benefits have already been paid out to someone else, Mr Kind ordered.
If the fresh decision is in Mr Gooch’s favour, the trustee must add ‘simple’ interest to the payment calculated at the average base rate for the time from 5 July 2010. It must also settle any tax liabilities and whatever the outcome pay £150 for distress caused.
NM Pensions is the sole trustee of the personal pension plan and Windsor Life, now ReAssure, is the provider.
The pension ombudsman’s decision said that following Mrs Gooch’s death in 2009, her family members gave the trustee information about the pair’s relationship, the circumstances of Mrs Gooch’s death and events following it.
Allegations included that Mrs Gooch was planning to divorce Mr Gooch and that they were not living together at the time of her death.
When Tony King, pensions ombudsman, asked for the information, the trustee declined to pass it on citing confidentiality.
Mr King said he eventually received “heavily redacted” and incomplete information. The decision states that despite having the same power as the court when it comes to producing evidence, he chose not to pursue the matter.
The trustees said they were exercising discretion granted under trust deeds and rules. The clause said that the trustee can pay the nominated beneficiaries or “any person who is entitled to an interest” in the member’s estate.
Mr Gooch’s solicitors contacted the Pensions Advisory Service who wrote to the trustees five times but they still refused to divulge the reasons why Mr Gooch was not receiving the pension.
The ombudsman found that while the trustee does have discretion as to who should be the recipient of the death benefits, the trustees appear to have based the decision on “partial evidence, much of which is hearsay”.
The decision said: “Whilst I can understand why the trustee might not have wished to disclose its sources, it could have obtained Mr Gooch’s evidence on the matter without doing so. It could, for example, have put the allegations to Mr Gooch in its own words.”
donia.o’loughlin@ft.com, ruth.gillbe@ft.com
