The Pensions Ombudsman has told Friends Life to honour an incorrect valuation of a member’s personal pension and to pay £100 to the complainant as compensation.
Complainant Maureen Bone complained that the actual transfer value of her pension plan was almost £9,000 lower than the value Friends Life originally quoted, in a recently published decision.
Ms Bone had been a member of the plan since April 1996 and was due to retire on 10 April 2012, but did not take her benefits at that point.
Capital units should have been converted to accumulation units and switched from with profits to cash on Ms Bone’s instructions, but neither took place, unbeknown to her.
In January 2014 she asked for a valuation and over the phone was given the sum of £55,583.72 which she requested to be confirmed in writing, but after a month waiting, she made a complaint to Friends Life.
The firm apologised for the delay and sent a statement at the end of February showing the value as £46,888.42 - prompting another complaint.
Internally Friends Life agreed to honour the originally quoted value and a retirement pack was sent to Ms Bone’s IFA on 1 April 2014.
The original value would still be honoured if the transfer request was made by the end of April, so the relevant forms were completed and sent before the deadline, but a clerical error meant that Friends Life did not make the transfer until 19 May, so the amount transferred was £50,582.29.
Again Ms Bone complained, with the firm responding in June that the quote was never guaranteed as it could fluctuate on a daily basis, adding the change in amount was due to the switch not being carried out in 2012.
Friend Life said they would not honour the £55,583.72 and transferred £50,582.29 to Ms Bone’s chosen provider, Scottish Life.
They made an offer of £800 for any distress and inconvenience caused and for the loss of expectation.
Tony King, chief ombudsman, concluded that although the true policy value may have been lower, all the elements of a contract for the additional sum were present.
“There was an offer which was accepted for the consideration of Ms Bone withdrawing her complaint,” he pointed out.
“It seems that Friends Life simply decided that the offer should not have been made, because when they had agreed to make it they did not realise that the switch had not been completed. If they entered into a contract under a mistake of their own, that is no concern of Ms Bone’s.”
Mr King therefore found that Friends Life should make up the difference in the value of Ms Bone’s Scottish Life pension, so within 28 days they are to pay to her Scottish Life plan the sum of £5,197.62 divided by £50,582.29 and multiplied by the present value.
He also ordered Friends Life to pay Mrs Bone £100 in compensation for the inconvenience caused by Friends Life.