Msd Pension Scheme · CAS-110599-Q0P8

CAS-110599-Q0P8

Ombudsman’s Determination Applicant Mrs E

Scheme MSD Pension Scheme (the Scheme)

Respondents AON Solutions UK Limited (AON) MSD Pensions Trustee Limited (the Trustee)

Outcome

Complaint summary Mrs E has complained that she suffered an unacceptable delay in receiving a Cash Equivalent Transfer Value (CETV) quotation by AON, who are the administrators of the Scheme. She said the implementation of the change in methodology for calculating the CETV was not carried out fairly.

She also complained that she was misled as to the likely level of her CETV by the figures available to her on “Pension Line”, AON’s online portal. She believes she has suffered a loss of £60,000, which is the difference between the 2022 CETV quotation and the value given on Pension Line. Mrs E wishes for her CETV to be recalculated using the methodology in place in December 2021.

As a result of this, Mrs E says she has suffered distress and inconvenience.

Background information, including submissions from the parties

On 20 December 2021, Mrs E submitted a request for a CETV quotation from AON. This was the second time she had requested a CETV within a 12-month window and so, as she did not have a statutory right to receive another in that period, a fee was charged to provide it.

1 CAS-110599-Q0P8 On 22 December 2021, AON wrote to Mrs E to inform her that the quotation would be prepared and that there may be a delay if it needed to send it to the Scheme’s Actuary for review.

On 1 January 2022, a new methodology for calculating the basis of CETVs was implemented by AON.

On 7 January 2022, AON sent Mrs E’s CETV to the Actuary for a review, as it was calculated using the new model.

Separately, on 13 January 2022, Mrs E obtained an estimated CETV figure of £644,607.97 via Pension Line.

On 17 January 2022, Mrs E chased AON for her transfer value pack using the helpline.

On the same day, AON contacted Mrs E to advise her that the transfer was unlikely to be issued within three to five working days. It confirmed that it would ask the Actuary to prioritise her application but that it would most likely take another 10 working days, as it needed to be referred due to the new model in place.

On 21 January 2022, the Actuary completed their review and the CETV quotation of £582,766.32 was confirmed.

On 28 January 2022, AON sent the transfer value pack to Mrs E, quoting the figure of £582,766.32.

On 21 February 2022, Mrs E’s independent financial advisor (IFA) issued a complaint on her behalf to AON. It said in summary:-

As Mrs E’s request for a CETV quotation was submitted long before the changes to the calculation basis, it was suggested that AON acted intentionally to delay processing her CETV calculation to reduce the cost to the Scheme at the detriment of its member.

It requested clarification and confirmation of the details relating to the old and new basis and documentary evidence of the effective date.

The transfer value should have been calculated on the old basis as Mrs E’s application was submitted well before the change.

Mrs E was not informed about the new basis calculation until her telephone call with AON on 17 January 2022.

If AON had undertaken the calculation within its Service Level Agreement (SLA) it would have been calculated on the old basis and not the new.

It was unreasonable to offer Mrs E a transfer value based on a methodology introduced long after her clear intention to transfer out. On 22 February 2022, AON acknowledged the IFA’s complaint on behalf of Mrs E.

2 CAS-110599-Q0P8 On 11 March 2022, Mrs E’s IFA requested some information, including Mrs E’s retirement figures.

On 12 March 2022, AON sent Mrs E information about transfer scams.

On 21 March 2022, Mrs E’s retirement benefits calculation was referred to the actuarial team for review.

On 24 March 2022, AON provided Mrs E’s IFA with a response to Mrs E’s complaint. It said in summary:-

It was unable to waive the fee incurred by Mrs E for the second CETV quotation request, as it was a requirement to cover the cost of the administration and actuarial work required to provide a non-statutory transfer valuation.

While it advised that most requests should be completed within 10 to 15 working days, this was a guide and does not account for further review required by the Scheme’s Actuary.

As a basis change had occurred, an additional review was necessary.

It apologised for not meeting its usual SLA but was comfortable with the overall turnaround time being reasonable.

It accepted that Mrs E was not kept informed of the progress of her CETV application and was not informed until 17 January 2022 that the delay was caused by a change in basis, effective from 1 January 2022.

The Scheme’s Actuary was required to review a number of transfer values produced under the updated calculation method and Mrs E’s transfer quotation was one of the values which required actuarial review.

It was unable to backdate its calculations with the intent of providing preferential terms to individuals.

It was unable to uphold Mrs E’s request for a revised transfer value based on the previous transfer value basis in force. On 26 March 2022, Mrs E’s IFA provided AON with its response to the complaint letter. It said in summary:-

Mrs E had suffered a financial loss as a result of the delay AON caused in implementing her CETV request.

It disagreed that AON was unable to waive the fee paid by Mrs E for the CETV quotation as it believed that the Trustee had the discretion to waive this fee.

The expected turnaround time of 15 working days had not been complied with and AON made no offer of compensation for the inconvenience caused to Mrs E by the non-communication and delay in processing her CETV application.

It was unreasonable that the date of change of basis was 1 January 2022 and not 10 to 15 working days before.

3 CAS-110599-Q0P8 Mrs E’s request for a CETV quotation was made before the change in basis, so the CETV should have been calculated on that basis and not the revised one. This was a breach of duty to Mrs E.

It asked AON to recalculate Mrs E’s CETV as at the time it was requested.

It was unreasonable for Pension Line to produce transfer values calculated on the old basis, 13 days after that basis was revised as the values were clearly inaccurate and misleading.

AON had a responsibility to update the website or to ensure that calculations were not issued after the effective date of change. On 30 March 2022, Mrs E’s IFA sent a chaser to AON for the retirement quotation it requested.

On 4 April 2022, AON sent the IFA the retirement quotation.

On 13 April 2022, Mrs E requested for her complaint to be dealt with under the Scheme’s Internal Dispute Resolution Procedure (IDRP). She said in summary:-

Despite submitting her request for a CETV in December 2021, she did not hear from AON until 17 January 2022 when she was advised that the process had taken longer than usual due to a new calculation being implemented.

She was distressed when she received the transfer value on 28 January 2022, as there was a significant difference between the figures displayed in December 2021 and the figures displayed throughout January 2022.

AON admitted that the CETV quotation was provided to her outside of its SLAs and acknowledged not keeping her updated.

She feels that the delay in dealing with her CETV quotation disadvantaged her, as the changes in gilt yields increased over that period.

At no point was she advised that there would be a change in basis. So, the values displayed during December 2021 on the Pension Line website were inaccurate and misleading.

She entered into an agreement when she requested the CETV quotation which was based on the information displayed and provided by AON on the Pension Line website.

As a layperson regarding pensions, she felt that AON should have taken responsibility for the information it provided to its members. At no point did AON update its values during the transition period from July 2021 on Pension Line, which was misleading.

She had become aware since raising her complaint that AON had now updated its website and wording to make this clearer, however this was not afforded to her.

4 CAS-110599-Q0P8 On 14 April 2022, AON wrote to Mrs E in response to her complaint. It informed her that her complaint would be dealt with by way of the IDRP and that a response should be expected within two months.

On 20 April 2022, AON received transfer out forms for Mrs E from Standard Life (the Receiving Scheme).

On 22 April 2022, AON sent Mrs E’s IFA a further complaint response and attached the IDRP forms. It said in summary:-

Legislation dictated that members were entitled to one transfer value in a 12- month period. The Trustee can provide further transfer values within that period but does reserve the right to charge for it.

As a gesture of goodwill, it reimbursed Mrs E for the £300 fee paid, due to the exceptional circumstances she experienced when not acting on the original CETV quotation.

It apologised to Mrs E for not keeping her informed of the progress of her application. However, the delay of six days did not impact the transfer value quoted to her. It therefore believed that there was no cause for any further payment to be paid to her.

The principles underlying how the amount available to a member as a transfer value are set out in legislation and have to represent the expected cost to the Scheme of providing the benefits that are payable to a member. The assumptions changed regularly to reflect changes to the financial markets, general view of future investment returns and inflation and the principles for setting the assumptions are updated when appropriate.

A full transfer review was undertaken in July 2021 and the Trustee made a number of changes to the calculation basis which were agreed to take effect from 1 January 2022.

The Trustee has an agreed SLA with AON which resulted in a timeframe for completion of the calculation after the change in basis. The transfer value was not deliberately delayed.

The transfer value was calculated using the assumptions appropriate to the date that it was calculated rather than the date it was received, which was consistent with standard industry practice.

It was not possible to provide Mrs E with a transfer value on the previous basis.

The calculation on Pension Line indicated that the figures were not guaranteed and the appropriate wording was used on the website to signpost members to this. On 8 June 2022, the Trustee provided its IDRP response to Mrs E’s complaint. It said in summary:-

• The Trustee had SLAs in place for all tasks undertaken by its administrators. The SLA for transfer out quotations, where actuarial input was required, was 15

5 CAS-110599-Q0P8 working days. This was not a contractual obligation and it was acknowledged that sometimes it was not possible to meet these SLAs for justifiable reasons.

• In Mrs E’s case, it was not possible for AON to meet the SLA due to the change of basis being implemented. This was when a change to the assumptions made in the actuarial calculation takes place. Because of this, it was necessary for the actuarial team to review the first cases that used the new calculation basis to ensure that the transfer model was calculating the benefits as expected.

• It was satisfied that the overall time taken to provide Mrs E with a CETV quotation was reasonable, given the unusual circumstances of a change of calculation basis.

• It understood the frustration Mrs E had felt by having to chase AON for an update. To mitigate this, it has now changed its process to provide revised estimated timescales to all members who request an update on their CETV applications.

• Under legislation, the Trustee must provide a member with the option of a transfer value up to 12 months before their normal retirement age. It is a statutory disclosure requirement that members are entitled to one CETV quotation in a 12- month period. As Mrs E had requested a CETV quotation prior to her request in December 2021, this request was chargeable.

• The transfer value basis and financial conditions used are those which were in place at the date of calculation which must be within three months of a member’s request under legislation and not on the date a request is made.

• The Trustee does not advise its members when there has been a change in any of its actuarial factors or transfer value basis.

• The wording on Pension Line reflected that it was a non-statutory transfer quotation and was therefore not guaranteed. It understood Mrs E’s comments that members may rely on this figure as part of their retirement planning and so it has since updated the wording to make the position clearer and agreed that an additional warning would be added to the website for any future changes in transfer value basis.

• The Trustee had a legal obligation to provide Mrs E with a CETV quotation which was the best estimate of the value required to provide her pension under the Scheme, within three months of a request. This had been complied with. The transfer value quotation was issued to Mrs E on 28 January 2022. This transfer value was not impacted by the delay in provision of information to Mrs E and had it been provided within its SLA, it would have been the same value. On 13 June 2022, Mrs E’s IFA sent AON confirmation of investments for the transfer scam process.

On 14 June 2022, AON advised Mrs E’s IFA that a Money Helper appointment was required by Mrs E.

On 21 June 2022, Mrs E provided AON with her Money Helper confirmation.

6 CAS-110599-Q0P8 On 23 June 2022, Mrs E’s IFA sent a chaser to AON for an update in relation to Mrs E’s CETV quotation request.

On 27 June 2022, Mrs E transferred her benefits out of the Scheme to the Receiving Scheme.

Following the complaint being referred to The Pensions Ombudsman (TPO), the Trustee and Mrs E made further submissions that have been summarised below.

The Trustee’s position

It accepted that Mrs E’s CETV quotation was provided outside of its SLAs, however it believed this to be justifiable due to the need to carry out additional checks on the first few cases using the new basis.

The CETV quotation was provided to Mrs E within the three-month statutory deadline.

It did not restrict Mrs E from making a CETV application as she had a statutory right to do so.

It understood that Mrs E expected her CETV quotation to be provided to her in advance of 1 January 2022 and under the previous calculation approach. However, as there was a change of basis, it had to honour a cutoff date for it to receive requests for CETVs.

It agreed that Mrs E should not have had to follow up for updates in relation to her CETV application. It had since made changes to its processes as a result of this and apologised for any inconvenience caused.

It disagreed with Mrs E’s contention that as she submitted a CETV request in December 2021, that she should have been given a CETV quotation using the December basis of calculation. The date a CETV is requested does not lock in the terms on which the CETV is to be calculated.

It was not the Trustee’s practise to advertise changes in basis as it is the member’s choice whether to request a CETV and whether to exercise their right to transfer that sum to another arrangement. If it were to alert all members of a change this would cause transfer decisions being taken hastily and for the wrong reasons.

The Pension Line wording clearly stated that the figures stated are not a statutory CETV statement and are not guaranteed. They do not override or supersede formal guarantee statements of entitlement to CETVs.

Despite the CETV SLA provision being missed, all other aspects of Mrs E’s transfer out process were appropriately dealt with.

Mrs E was not legally entitled to a statement of entitlement to a CETV calculated before the change in calculation basis. A CETV of the amount of approximately £644,000, shown on Pension Line as at 1 December 2021, was never her entitlement and cannot be said to have been lost. 7 CAS-110599-Q0P8 It did not uphold Mrs E’s complaint.

Mrs E’s position

She remained disappointed with the Trustee’s decision.

As she requested her CETV quotation in December 2021, her CETV should have been calculated using the methodology in place at the time. She had relied on the information provided to her.

Her outcome was not as good or the same as other members’ outcomes despite using the same information from Pension Line.

It was not fair that the information on Pension Line did not correspond with the CETV quotation she received.

No information was provided to her of the imminent changes to the methodology which would have enabled her to have fuller understanding of her decision to transfer out.

Adjudicator’s Opinion

8 CAS-110599-Q0P8 Mrs E did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Mrs E provided further comments which do not change the outcome. I agree with the Adjudicator’s Opinion and note the additional points raised by Mrs E. AON were also given an opportunity to make comments on the Adjudicator’s opinion, but they have not done so.

Additional points by Mrs E

Mrs E expressed that despite being offered a goodwill payment of £300 by AON, she did not accept this as she felt it would have prejudiced her complaint.

She did not accept that the Pension Line estimated CETV figure was anything but negligent as it was not accurate. She finds that it would be reasonable for a member to expect the figures to be presented on the right calculation basis and so, she believes this constitutes incorrect information.

Mrs E reiterated that there was no warning on the Pension Line website to indicate that a change of basis had taken place.

Ombudsman’s decision

1 Notably the Pension Schemes Act (PSA 93) and The Occupational Pension Schemes (Transfer Values)

Regulations 1996 (the Transfer Value Regulations). 2 Section 93A(4) PSA 93, and Regulation 6(1)(a) of the Transfer Value Regulations.

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I do not uphold Mrs E’s complaint and no further action is required from AON or the Trustee. Mrs E should contact AON if she wishes to accept its goodwill offer of £300.

Dominic Harris

Pensions Ombudsman 6 November 2025

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