Aegon has been told it can’t demand back £13,500 it overpaid an adviser’s pension transfer client.
In 2004 a saver, referred to as Mr L, switched the funds within his personal pension.
One of the fund switches meant he was no longer in the with profits fund and no longer eligible for a terminal bonus.
However the bonus was never removed from Mr L’s personal pension records.
When Mr L’s wife was diagnosed with a serious illness in 2013 the pair decided to use some of the Aegon pension to finance a house move.
Aegon didn’t offer a suitable drawdown product for Mr L so in June 2015 he decided to transfer his pension to another provider, take tax free cash and use some of the money for the move.
Around December 2015, Mr L handed in his notice to his employer confirming he would leave in March 2016.
While serving his notice Aegon wrote to Mr L’s financial adviser in January 2016 to explain that it had overpaid him around £13,500 as it failed to realise the terminal bonus stopped being eligible when he switched funds back in 2004.
The provider asked for it to be repaid and offered Mr L £500 for the trouble and upset it caused him.
Mr L didn’t accept the offer and complained to the ombudsman, who upheld his complaint.
Aegon argued the overpayment was not sufficient for Mr L to stop working and it issued a correct quote in August 2014.
Mr L chose to defer his retirement to 2016, showing he made assumptions based on that correct quote rather than the one that resulted him taking tax free cash and £13,500 he wasn’t entitled to, Aegon argued.
In a final decision, ombudsman Roy Milne said: “Providing incorrect information doesn’t mean that Mr L is entitled to the incorrect amount. In most cases a payment for any distress or inconvenience would be appropriate. But this case is different.
“Mr L took action as a result of the information he was given. I’m satisfied that he relied on that information. I cannot be certain how he would have acted if he had been given the correct information.
“But, I think it’s likely that Mr L would have continued working. He has taken another job earning a lot less than he earned before. I think it’s most likely that he would have continued working for up to a year. He has changed his position.”
The ombudsman ruled Mr L should not have to repay the money paid to him by Aegon in error.