Pensions  

Phoenix stands by initial decision in widow’s favour

Phoenix stands by initial decision in widow’s favour

Phoenix Life Ltd has stood by its initial decision to award a death benefit to the widow of a bankrupt man, despite the Pensions Ombudsman ordering it to review its first decision.

Phoenix decided to pay the death benefit of £11,723.79 to the widow of the scheme member despite the fact that he had been declared bankrupt during his life.

After the benefit was paid out in August 2011 to the scheme member’s widow – referred to as Mrs Elsworth by the ombudsman - the bankruptcy trustees contacted Phoenix to claim that they believed this was the wrong decision.

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Deputy pensions ombudsman Jane Irvine said: “When the bankruptcy trustees stepped into Mr Elsworth’s shoes on their appointment they effectively assumed his rights to compel the payment of benefits in the future and on the happening of certain contingencies in the manner set out in the scheme’s rules.

“Such rights did not include the payment of death benefits because, as argued by Phoenix, Mr Elsworth had no entitlement to fetter the discretion of Phoenix to determine the best option for payment of the death benefit under the scheme’s rules.

“It follows that the bankruptcy trustees did not assume that right on their appointment.”

Mr Elsworth joined The Life Association of Scotland Strata Personal Pension Scheme – which later became Alba Life Personal Pension Scheme – in January 1992.

In 2006 ownership of the business of Alba Life Limited was transferred to Phoenix.

But Ms Irvine said Phoenix should have reviewed the decision when it became apparent it was being disputed.

She said: “Since the bankruptcy trustees had indicated in their letter of 15 July 2011 their wish to make a claim, it would appear there were competing beneficiaries.

“It therefore ought to have been obvious that there was a possibility that a dispute may subsequently arise.”

However, the provider reviewed its original decision, but still maintained that it was right to give the money to the widow.

Right to Reply

A spokesperson for Phoenix said: “We have, as directed by the Pension Ombudsman, reviewed our initial decision under the remit of the Pension Death Claim Forum and can confirm that our decision remains unchanged.

“We are comfortable that the correct beneficiary has received the funds and that we have considered all relevant matters to enable us to exercise our discretion.”