Phoenix Life Limited · DRN-6255084

The complaint Mr G complains that Phoenix Life Limited (“Phoenix”) has acted unfairly in the way it has valued his pension plan and provided poor service. What happened Mr G has a Self-Employed Retirement Plan (“SERP”) invested in Phoenix’s with-profit funds. Mr G was making a monthly contribution to the plan. But in around April 2025, began to make enquiries about the value of his pension and the contributions he was making. On 11 June 2025, Mr G says he called Phoenix and was told stopping his contributions would not impact the value of his plan. Phoenix hasn’t been able listen to or provide a recording of this call because of a system error. On 13 June 2025, Phoenix wrote out to Mr G to confirm that he could stop paying his contributions. It also said: “This plan is conventional with profit so would (sic) have an impact on the expected value as payments are stopped earlier than expected. You can re-start premiums within 12 months from when you stopped/missed.” On 26 June 2025, Mr G complained to Phoenix as he was unhappy with the performance of his plan and its cash value. On 16 August 2025, Mr G received an arrears letter from Phoneix because he’d stopped paying his pension contributions. Phoenix responded to the complaint on 20 August 2025. It explained that Mr G’s pension was set up to provide a minimum guaranteed pension for life. And that because of this, Phoenix used Notional Cash Factors (“NCFs”) to convert the plan into a cash transfer value. It explained that interest rates, annuity rates and life expectancies all impacted the cash value given to Mr G’s pension – which it said was correctly valued. Mr G complained to Phoenix again on 27 August 2025. In addition to his continued concerns about the cash value of his pension, he said Phoenix had given him incorrect information in the call on 11 June 2025 that stopping contributions to the pension would have no impact on his plan. He also said Phoenix had provided poor service. Phoenix responded on 12 September 2025 explaining again that Mr G’s pension had been valued correctly. It acknowledged that it might have given incorrect information in the call on 11 June 2025 (which it couldn’t listen to because of the system error), but it followed that up with correct information about the impact of stopping contributions in the letter dated 13 June 2025. Phoenix offered Mr G £100 for the incorrect information, but otherwise didn’t agree that it had provided poor service to Mr G. Mr G then referred his complaint to our service.

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One of our investigators looked at all the evidence and explained why she felt that, under the regulator’s time limit rules for complaints, we only had jurisdiction to consider any valuations that Phoenix had provided to Mr G in the last six years and not any that had been provided earlier. The investigator said Phoenix had fairly explained the valuation of Mr G’s pension and offered reasonable compensation for the incorrect information given on the call on 11 June 2025. So she didn’t uphold the complaint. Mr G has now asked me to make a final decision on his complaint. He thinks it’s unfair that he’s been contributing to his pension for several years and yet it’s worth less now than it did before. He doesn’t think Phoenix has explained how this could possibly be the case. My findings - jurisdiction Mr G hasn’t disputed the investigator’s findings about our jurisdiction. So I deal with this only very briefly here: • In the circumstances of this complaint, we don’t have jurisdiction to consider any valuations that Phoenix provided to Mr G before 2009 – i.e. those provided more than six years before he complained. • We also don’t have jurisdiction to consider Mr G’s concerns about Phoenix’s complaint handling. That’s because complaint handling isn’t a regulated activity. What I’ve decided on the merits – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. The plan value With-profits providers such as Phoenix have wide discretion as to how a with-profits fund is managed, including how benefits are paid, which are all a matter of its commercial judgement. This has led to criticism about the opaqueness of with-profits funds. However, Phoenix, like all with-profits providers, is required to operate their with-profits funds, including the SERP with-profits fund, in accordance with its Principles and Practices of Financial Management document (“PPFM”). The PPFM is published (and available online) and sets out how Phoenix manages its with-profits funds and it is accountable to the regulator, the Financial Conduct Authority (“FCA”), in doing this. It’s required, among other things, to appoint a with-profits actuary and the FCA provides rules and guidance on their duties. At the time Mr G’s plan was started, the options for taking benefits in retirement were limited and generally the only way to take pension benefits was to purchase an annuity which provides a guaranteed income for life. This was what the SERP was designed to provide – a guaranteed income from age 60. But the original policy document would have also explained that a cash equivalent value could be provided at retirement for the purchase of an annuity from a different provider. The cash equivalent was defined as “the sum obtained by multiplying the annual amount of annuity plus any bonuses, by the conversion factor”. Additional options for taking benefits at retirement became available over time, most notably in 2015 with the introduction of ‘Pension Freedoms’ legislation. This legislation made it

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possible for people to access their pension benefits from age 55 and provided options to take benefits ‘flexibly’ instead of having to purchase an annuity. But in order to access the flexible options provided for under this legislation providers of older policies, like Mr G’s, need a way to convert guaranteed benefits payable in the future into a certain cash sum payable now. Phoenix uses a conversion factor that it calls the NCF for this purpose. I understand that the cash value of the benefits of the SERP at any time is obtained by multiplying the guaranteed annuity by the NCF then in force. NCFs are commercially sensitive and so not something I would expect a business to disclose but I understand includes reference to long term interest rates and current annuity rates. The NCFs used by Phoenix are also frequently reviewed by its With-Profits Committee and Board to ensure that all customers are treated fairly as part of its responsibilities under the PPFM and its regulatory obligations. Phoenix also made it clear in previous statements sent to Mr G that values were not guaranteed. Of course, I understand Mr G’s concerns about why his pension has a value now that is lower than in previous years despite him making monthly contributions. He thinks the fund should be worth more. But, in light of the above, I think Phoenix has acted fairly in using an NCF to determine the cash equivalent value of Mr G’s pension. I’m satisfied that the cost of providing the guaranteed pension to Mr G has reduced – and that has impacted the cash value of his pension. I hope the above helps Mr G understand more about why this has happened and why I don’t think Phoenix has treated him unfairly in valuing his pension using the method it has. Poor service Phoenix accepts that it gave Mr G incorrect information about the implications of stopping his contributions to the pension in the call on 11 June 2025. But Phoenix provided the correct information soon after – clarifying that it could have an impact on his pension value. It has also been made clear to Mr G that he can re-start his contributions within 12 months. As a result, I don’t think Mr G has been significantly impacted by the error and I think the offer of £100 compensation is fair. If it hasn’t done so already, Phoenix should pay this to Mr G. But, for the reasons I’ve explained, it doesn’t need to do anything further. My final decision Phoenix Life Limited has already made an offer to pay Mr G £100 to settle the complaint and I think this offer is fair in all the circumstances. So, if it hasn’t done so already, my decision is that Phoenix Life Limited should pay Mr G £100. Under the rules of the Financial Ombudsman Service, I’m required to ask Mr G to accept or reject my decision before 27 April 2026. Abdul Hafez Ombudsman

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