Sun Life Financial Canada Fsavc Plan · CAS-38761-Q0T4

CAS-38761-Q0T4

Ombudsman’s Determination Applicant Dr N

Scheme Sun Life Financial of Canada FSAVC Plan (the Plan)

Respondent Sun Life Financial of Canada (SLFC)

Outcome

Complaint summary

Background information, including submissions from the parties

“This Condition shall not apply unless a Member’s Premium of not less than £200 per annum (or such other amount as the Company may determine for the purposes of this Condition) has been paid in each of the Policy Years which terminates during the 5 year period ending on the date on which retirement commences.”

“The period from the Commencement Date or any Policy Anniversary to the day immediately preceding the next following Policy Anniversary both days inclusive.”

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“Your policy may qualify for a loyalty bonus, as long as certain conditions are met. ... Check your terms and conditions or call us to find out if your policy includes a retirement bonus and how this can be lost.”

“If the total value of all your pension funds is more than £1,000,000, and you have not taken steps to protect your funds, we have to apply a 'Lifetime Allowance' charge set by the Government. We strongly recommend that you take financial advice if your total pension savings exceed or are close to this amount.”

“Please note that if your policy lapses due to non payment of premiums then it will only be possible to reinstate your policy if this is an option within your policy Terms and Conditions.”

“The annual premium paid must have been at least £200 for the last 5 complete policy years prior to the retirement date or liquidation, whichever is sooner.”

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“I confirm this policy does not qualify for a loyalty bonus at this time as the client has not reached the age of 60.”

“... please send the full amount to us immediately and that way you will retain the valuable benefits of your policy. Although your policy is active at the moment, this won't be the case indefinitely.”

“Check your terms and conditions or call us to find out if your policy includes a retirement bonus and how this can be lost.”

“I confirm this policy qualify (sic) for a loyalty bonus at this time.”

“Check your terms and conditions or call us to find out if your policy includes a retirement bonus and how this can be lost.”

“I confirm this policy does not qualify for a loyalty bonus as the above criteria weren’t met. Even if we receive further payments for this policy, it will not qualify for the bonus due to the premiums not totalling £200 each year for the last 5 complete policy years prior to the retirement date.”

On 12 April 2019, Dr N appealed to SLFC, asking it to apply its discretion and pay her the loyalty bonus or allow her to pay the missing contributions retrospectively so that the loyalty bonus terms could be met.

On 24 April 2019, SLFC responded to Dr N informing her that it was unable to consider payment of the loyalty bonus or accept a contribution to be paid retrospectively. It listed the correspondence that it had previously had with Dr N and

3 CAS-38761-Q0T4 her adviser, pointing out the instances where reference had been made to the loyalty bonus.

Adjudicator’s Opinion

• Dr N did not pay any contributions during the Policy Year 19 December 2017 to 18 December 2018. As a result of this, she was not entitled to a loyalty bonus under the terms of the Plan.

• The Adjudicator considered the communications between SLFC, Dr N and her adviser in the period before the loyalty bonus was lost. The Adjudicator noted that none of the exchanges explicitly stated that the bonus would be lost due to her actions but, on two occasions, SLFC had outlined to her adviser the terms under which the loyalty bonus would be lost. SLFC had also encouraged Dr N to refer to the terms and conditions of the Plan with regard to the loyalty bonus.

• The Adjudicator noted that some of SLFC’s messaging concerning the loyalty bonus appeared under a heading of ‘Guaranteed Annuity Rates’. However, the Adjudicator was of the view that the contents of the communications from SLFC and the Plan documentation were adequate for Dr N to understand the implications of ceasing contributions on her eligibility for the loyalty bonus.

• While it is true that Dr N contributed consistently over 23 years, the policy documentation was clear in defining the criteria that needed to be met for a loyalty bonus to be paid. 4 CAS-38761-Q0T4 • Dr N did not meet the criteria because she had not paid premiums totalling £200 each year for the last five complete policy years before her retirement date. Any application of discretion is solely for SLFC to decide upon. It has indicated that it will not apply discretion in this instance on the basis that sufficient information had been provided in relation to the loyalty bonus. The Adjudicator was of the view that the decision was not unreasonable.

• In its letter, dated 18 December 2018, SLFC confirmed that the loyalty bonus was still applicable. This fact was correct at that date, but this was near the end of the Policy Year, so by the time Dr N received the letter, it no longer applied.

• In several of SLFC’s letters, it said to check the terms and conditions or telephone it to find out if a policy included a retirement bonus. As her adviser had telephoned SLFC she should not have had to also review the terms and conditions.

• SLFC put the onus of interpretation of its terms and conditions on her. She believes that this approach is not appropriate given the circumstances of her complaint.

• Her adviser contacted SLFC on three occasions and, on no occasion, did it receive an explicit answer which highlighted the imminent risk of the loyalty bonus being lost.

• SLFC’s refusal to exercise its discretion was unreasonable. SLFC failed to give her the information needed to make decisions relating to her loyalty bonus.

• It was unreasonable for SLFC to have allowed her entitlement to a loyalty bonus to expire without notifying her in advance that this was about to happen.

Ombudsman’s decision

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Having reviewed these letters, I find that they clearly stated the terms for the payment of a bonus and there was little need for interpretation. I am satisfied that the criteria was correctly set out and that Dr N could have reasonably understood the consequences of ceasing her contributions.

I do not uphold Dr N’s complaint.

Anthony Arter

Pensions Ombudsman 4 February 2021

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