With Profits  

Ombudsman backs Phoenix Life’s bonus explanation

Phoenix Life stated the quotes took into account any guaranteed annuity rates which applied to the plan and were just examples and added members should ask if they would like quotes based on specific choices they wanted to make. 

The letter also recommended taking advice before making a decision and offered assistance in finding a financial adviser. 

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On 18 May 2011, Mr N notified Phoenix Life that he had decided not to take his benefits before the maturity date because taking the pension early is too expensive in terms of lost earned bonus and final bonus payments. 

Mr N continued paying into the policy and his September 2014 annual statement stated that ‘final bonus, if applicable, is only payable when the plan becomes a claim and final bonuses are reviewed biannually as a minimum but may be changed at any time and are not guaranteed’.

Phoenix Life’s July 2015 with profits update also stated that ‘the payment of a final bonus is not guaranteed and guarantees would normally be lost if the policy is surrendered or transferred out’ and the final bonus may be payable but this is not guaranteed. 

Mr N took his benefits on 25 March 2016 and Phoenix Life said the total value of his policy at that date was £41,363 - the combined value of the guaranteed basic sum assured of £25,496 and total accrued bonuses of £15,867. 

Mr N complained he had lost out on annuity income by delaying his retirement until 2016 in the reasonable expectation that he would receive a final bonus. 

In his complaint, Mr N said while Phoenix Life’s continued references to ‘a non-existent final bonus’ in its literature is legal, he certainly found them mis-leading. 

Mr N argued Phoenix Life should stop hiding behind phrases such as ‘...may be added’ and ‘...not guaranteed’ and be honest and clear in its information. 

He argued Phoenix Life failed to confirm that there would be no possibility of a terminal bonus - at a time when he was trying to make an important financial decision about his pension. 

He calculated his financial loss to be £2,400, equating to the additional five years’ worth of premiums he would not have otherwise paid and his calculated loss of five years’ pension payments of £14,000, plus five years’ interest on his cash lump sum to be reasonable compensation. 

The Pensions Ombudsman stated the evidence did not support that Phoenix Life gave Mr N misleading information about the payment of terminal bonus on his policy and the communications “were sufficiently clear.”

emma.hughes@ft.com