The Pensions Ombudsman has told Fast Pensions it must pay out a death benefit to the widow of a former client after the company was accused of purposely delaying payments.
In 2013, a financial adviser recommended their client, referred to as Mr K, transfer his benefits under the NHS Scotland pension scheme to a defined contribution scheme provided by Fast Pensions.
The transfer was recommended by the adviser because the client was dependent on alcohol, meaning his life expectancy was short and his death benefits would be better with his wife, Mrs K.
While the original NHS scheme offered a small pension and no lump sum, Fast Pension offered a lump sum that was twice the value of his pension fund.
In March 2015, Mr K died of cirrhosis of the liver, at which time his pension fund was valued at £79,160.
His widow then contacted Fast Pensions to claim the death benefits, but the firm refused because there was an insurance exclusion clause for paying benefits if the death was caused by alcohol addiction.
Mrs K then complained that she and her husband had not been made aware of this restriction.
Fast Pensions said there was no payment due from the insurer, due to the exclusion clause, but that Mr K’s fund value would be paid out when his funds had been disinvested.
The pension firm then asked to see evidence of Mr and Mrs K’s marriage and confirmation of Mr K’s will before paying out the fund value.
Despite Mrs K disputing whether the evidence was necessary under Scottish law, Fast Pensions stressed that it was their policy, and she therefore sent the information a few days later.
Mrs K complained to the internal dispute resolution team at Fast Pensions, saying she was unhappy with the service provided.
She also complained the delays meant she still had funeral debts, mortgage arrears and solicitor’s bills to pay.
However, in September 2015, Fast Pensions told Mrs K’s financial adviser that it was not using delay tactics, as had been suggested, and said the trustee of the scheme was reviewing the documents.
The pension provider sent another letter that month saying there was a two-year time limit after the scheme member’s death for the beneficiary to be paid the lump sum.
Then in December 2015, Fast Pensions told Mrs K that the fund disinvestment process was still ongoing, but she received no correspondence from the firm in 2016.
Mrs K contacted the pensions ombudsman in February 2017.
The ombudsman concluded the lump sum should have been paid before 5 March this year, calling the delay “maladministration” on the part of Fast Pensions because Mrs K had provided all the necessary paperwork.
“It was clear from the correspondence that Mrs K had suffered much distress and inconvenience as a consequence of the delays on the part of Fast Pensions,” the adjudicator said.