Quartzelec Pension Scheme · CAS-33317-H3P1

CAS-33317-H3P1

Ombudsman’s Determination Applicant Mr S

Scheme Quartzelec Pension Scheme (the Scheme)

Respondent Quartzelec Pension Trustees Limited (the Trustee)

Complaint Summary

• The transfer of his pension benefits from the Alstom Pension Scheme (the Alstom Scheme) to the Scheme. Mr S said that he elected to transfer his pension benefits in 2004, so, his pension at age 60 should be calculated using a final salary of approximately £35,000 for all his pensionable service.

• His alleged entitlement to the top-up element (the top-up).

Summary of the Ombudsman’s Determination and reasons

1 CAS-33317-H3P1 Detailed Determination Material facts

“[Quartzelec] prefer you to make a decision regarding your transfer option by 30 August 2004. However, it is appreciated that it may take some time for you to appoint an Independent Financial Adviser, therefore transfers will be accepted provided your completed transfer discharge form is returned to Aon Limited [Aon] on or before 30 September 2004…”

“The attached Transfer Offer Summary shows the pensionable service you have accrued as a member of the [2002 Scheme] from 1 July 2002 to 30 June 2004. If you decide not to transfer this service to [the Scheme] you will be issued with a Preserved Benefit Statement confirming your leaving service benefits under the [2002 Scheme]”(original emphasis).

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“Over the last week you should have received a benefit statement…

It is clear that (based on the numerous calls received), the statements have caused some concern…

AON has been asked to contact all those receiving statements to confirm in writing what previous service members are entitled to treat as continuous (original emphasis). This will be sent to you in January…

As with last year’s transfer forms, this will be based on information from Alstom Pensions Department.”

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“We have now received a response from the Trustee who has advised that, as there is no evidence on file that you rescinded the right to transfer, you should be treated as not having rescinded that right.

Subsequently, your total service will be included in our calculation of your benefit entitlement…”

“Your retirement benefits are calculated based on inflationary increases from date of leaving to NRD. As these increases are not yet known in the future we are unable to provide you with a projection at NRD. JLT, who administer your Alstom benefits have confirmed that they too are unable to provide a projection.

For information I can confirm that your Quartzelec only pension at date of leaving was £2,142.83 p.a., at today’s date this has increased to £2,779.25 p.a…”

“If a member decides to leave [the Scheme] they lose the top-up element offered by the Company and they sever the link with the Alstom Pension Scheme. I can confirm that the transfer value illustration we issued in our letter dated 21 April 2017 does not include the value of the top-up element…”

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• The Trustee provided copies of the correspondence between itself, the Scheme administrators, Quartzelec and Mr S between 2004 and February 2019. It has also provided a copy of the Rules.

7 CAS-33317-H3P1 Conclusions

8 CAS-33317-H3P1 “Every effort has been made to ensure the accuracy of the benefits shown in this illustration. However, in the event of any error, your benefits are limited to your correct entitlement.”

“Your present and expected benefits have been calculated from the information held on record. It is important that you examine and understand the amounts and the type of benefits in the statement. If there is any error, please report it immediately so that your records can be corrected, and a revised statement issued.”

Notwithstanding this, I note that subsequent to being sent the deferred statement, Capita advised Mr S, in a letter dated 4 July 2014, that the Trustee had confirmed there was no evidence on file that he had rescinded the right to transfer. Consequently, he should be treated as not having rescinded this right. On 14 August 2014, Capita provided Mr S with a benefit illustration that included the top-up. In June 2017, Conduent also informed Mr S that he would receive the top-up when he retired, provided he did not transfer his benefits from the Scheme.

I find that the correspondence Mr S received between 2014 and 2017, from Capita and Conduent was misleading and confusing. The position is certainly complicated by 9 CAS-33317-H3P1 the fact that the bulk transfer, is yet to be finalised. Mr S was unable to obtain any clarity in respect of his pension benefits until 21 February 2018, when the Trustee advised that there was no record of him consenting to a transfer.

I appreciate that Mr S considers that he elected to transfer his benefits from the Alstom Scheme to the Scheme. On the balance of probabilities, I am not persuaded that there is sufficient evidence to support Mr S’ assertion that he did transfer his past service to the Scheme.

In his submissions to my Office, Mr S acknowledged that he will not incur any financial loss until he attains age 60, at the earliest. Mr S estimated that his alleged loss would represent a percentage reduction in his annual pension of approximately 40 to 50%. The implication being that he may not be able to retire from age 60, as he had anticipated.

As Mr S has not yet reached age 60, I find that there is no actual financial loss at this time and his complaint is one of loss of expectation.

Mr S was placed on notice as early as 2007, that there was a possibility that his transfer had not been processed correctly. I accept that he was provided with a deferred benefit statement that only showed his post Alstom pensionable service. However, due to the complexity of the Alstom bulk transfer not being agreed, I consider that he did not have sufficient knowledge that his benefits were not transferred until February 2018. I am mindful that Mr S was age 51 at the time, and that he could have taken action to mitigate the consequences of his initial service not having been transferred.

The top-up

Although there is insufficient evidence that Mr S did elect to transfer his benefits, I have considered whether Mr S has a case for negligent misstatement against the Trustee.

Negligent Misstatement

For a claim of negligent misstatement to succeed, it is necessary for the applicant to prove:-

(i) A clear, unequivocal, incorrect representation.

(ii) The Trustee and/or Employer owed a duty of care to the applicant. 10 CAS-33317-H3P1 (iii) The duty of care shown was below a reasonable standard.

(iv) The applicant has reasonably relied on the incorrect information. And, in doing so, experienced a reasonably foreseeable, irreversible loss that he would not have suffered had the employer and/or Trustee provided the correct information.

I find that the employer made clear representations to Mr S in 2005 and 2006. The correspondence confirmed that his pensionable service prior to joining Quartzelec would be included for the purpose of calculating his pension benefits from the Scheme.

However, from 2007 the information from the Scheme administrators, issued on behalf of the Trustee, was far from clear. There was conflicting information that indicated, on occasion, that Mr S did not transfer in 2004, while other correspondence confirmed that he did, in particular Capita’s letter to Mr S dated July 2014. The fact that the bulk transfer from the Alstom Scheme to the Scheme remained outstanding likely compounded matters.

On balance, I do not consider that the correspondence issued by the Scheme administrators constitute a clear, unequivocal, incorrect representation. So, a claim of negligent misstatement cannot be substantiated against the Trustee. However, the lack of clarity in their correspondence does explain Mr S’ continued efforts to seek clarification from the Trustee and the Scheme administrators.

I find that the deferred benefit statement Mr S received on leaving employment in 2007 is particularly persuasive in placing doubt on the transfer. It did not display a value in respect of transferred in service. Furthermore, it only referred to 4 years and 327 days pensionable service.

I do consider that the Trustee has a duty of care to Mr S, as he has deferred benefits within the Scheme. The Trustee has not shown sufficient care in the provision of correct information to Mr S. I note that it accepts there has been maladministration in its handling of Mr S’ records.

I do not doubt that Mr S relied on the information he received between 2004 and 2019, and had a genuine belief that he transferred his pre 1 July 2002 accrued benefits. On this basis, he believed his pension payable from age 60 would be calculated on a final salary of £35,038 and include a top-up. However, this does not materially change the outcome given the sequence of events.

The key point is that the information in question was provided to Mr S after the date he decided to submit his transfer instructions. According to Mr S there was no ambiguity in respect of this information, and he knew that he had to submit the Form.

From 2007, Mr S was placed on notice that he may not have transferred his benefits from the Alstom Scheme to the Scheme. Despite the provision of further conflicting information, I do not consider it reasonable for Mr S to have relied on the information provided to him by the Scheme administrators on behalf of the Trustee.

11 CAS-33317-H3P1 However, I find that because of the confusing information the Scheme sent to Mr S between 2007 and 2018, he has suffered a loss of expectation and severe distress and inconvenience.

Directions

Anthony Arter

Pensions Ombudsman 6 September 2021

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