Bt Pension Scheme · CAS-29766-K3N5

CAS-29766-K3N5

Ombudsman’s Determination Applicant Mr L

Scheme BT Pension Scheme (the Scheme)

Respondent BT Pension Scheme Trustees Limited (the Trustee)

Outcome

Complaint summary Mr L’s complaint against the Trustee is that he has not been awarded an ill health retirement pension (IHRP) from the Scheme. Mr L believes that he should have been offered a cooling off period by the Scheme’s administrator (the Administrator) after his pension benefits were crystallised in October 2018, in which he subsequently could have applied for an IHRP.

Background information, including submissions from the parties

1 CAS-29766-K3N5 “I understand the long term impact of my decision and that my decision is irrevocable.”

Mr L also made a handwritten note in the Form asking the Administrator to process the payment of the lump sum immediately and credit it to his account on 12 October 2018.

On 12 October 2018, Mr L contacted the Administrator asking when his pension would be paid, and he was advised that this would be done on 16 October 2018.

The Administrator paid Mr L’s pension on 16 October 2018 and backdated it to 2 October 2018.

On 25 October 2018, Mr L contacted the Administrator to inform it that he had just been diagnosed with a heart disease. He asked whether “the Trustee would consider revising his benefits so that they could be paid on an early retirement for ill health basis.” The Administrator said that it would look into this matter as soon as possible.

Mr L subsequently provided a medical report to the Administrator supporting his medical condition. Mr L chased the Administrator for an update on 14 November, 26 November and 30 November 2018.

On 5 December 2018, the Administrator wrote to Mr L saying:

“The declaration you signed on 6 October 2018 to accept a lump sum and pension payable on an actuarially reduced basis from 2 October 2018 is irrevocable. Once a member’s benefits are crystallised it is not normally possible to allow a member to revisit their retirement option. This is due to restrictions under tax legislation which limit what the Scheme can do once a member’s benefits are crystallised. Furthermore, the Scheme rules do not allow for the benefits to paid [sic] on a different basis once payment has commenced. There would generally need to be clear evidence that a pension scheme did not put the member’s benefits into payment in line with the member’s instructions. As confirmed, the Scheme put your benefits into payment in line with your instruction…”

On 17 December 2018, Mr L sent a letter of complaint to the Administrator that said:

“I acknowledge, my instructions were followed, however, my circumstances changed considerably due to my sudden and unexpected health mishap and as soon as I found out and was well enough to contact [the Scheme] I did. I did so within 30 days which is in my opinion, is [sic] a very reasonable period in which any benefit member should be allowed to change instructions as is allowed in some other policy schemes.”

Mr L’s case was subsequently referred to the Trustee for consideration. On 16 January 2019, the Trustee sent Mr L a response that said:

2 CAS-29766-K3N5 “Scheme pensions are not revised as a matter of course when there is the discovery of ill-health after benefits have been ‘crystallised’ (whether that discovery be years after a member has taken receipt of their benefits or months). Most pension schemes require an ill-health qualification to be established prior to benefits being paid. Members are also expected to consider their pension provision and seek independent financial advice before making any decision in relation to early retirement. Although we are sympathetic to your position…we are unfortunately not able to make the change that you have requested…When you retired from the Scheme in October 2018 you stated your confirmation to access your entitlement under the Rules…you made reference to a cooling off period. Please note there is no cooling off period in the Scheme and unfortunately this is therefore not relevant.”

Dissatisfied with the Trustee’s response, Mr L appealed in February 2019, by invoking the Scheme’s two-stage internal dispute resolution procedure (IDRP).

The Trustee agreed that Mr L’s complaint be escalated straight to stage two of the IDRP. On 12 April 2019, the Trustee sent Mr L a stage two response that partly upheld his complaint and said:

“…the pension forms you signed contained a statement confirming that they ware [sic] irrevocable and that there is no cooling off period in respect of benefits in the Scheme…you raised your query asking to amend your pension benefits on 25 October 2018 but had to chase three times before being told on 30 November 2018 that your benefits could not be amended…The IDRP 2 Committee did however request the Secretariat to contact BT [the Principal Company] to ask whether they would consider agreeing to any additional benefits being provided to you…unfortunately BT have not agreed to this…In recognition of the distress and inconvenience that has been caused as a result of the poor service you received, the IDRP 2 Committee would like to offer you a compensation payment of £500.”

The Trustee maintained its previous stance and added that his pension benefits had been paid in accordance with his instructions. The Trustee was not aware of Mr L’s illness at the time. Also, there was no guarantee that he would have been successful with his application for an IHRP. The Trustee also said that as the Scheme was a defined benefit arrangement, there was no cooling off period for members.

Adjudicator’s Opinion

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Mr L did not accept the Adjudicator’s Opinion and the complaint was passed to me to consider. Mr L provided his further comments which do not change the outcome. I agree with the Adjudicator’s Opinion and I will therefore only respond to the points made by Mr L for completeness.

4 CAS-29766-K3N5 Mr L’s summary of points: -

• Similar symptoms of dizziness, weakness, excessive sweating, breathless and fatigue were being experienced for nearly six months prior to 16 October 2018, which he was not aware at the time these related to his heart condition, as confirmed by his doctor.

• He is now permanently on life saving medication and Defibrillator. In addition, he has also been diagnosed with Type 2 diabetes in June 2019.

• Mr L had to chase the Trustee for an update on 14 November 2018, 26 November 2018, 30 November 2018, until 6 December 2018, when the Trustee sent him a decision letter.

• The IDRP 2 Committee did request that the Trustee ask BT whether it would consider agreeing to any additional benefits being provided to Mr L, however this request has been declined by BT.

• He is totally flabbergasted with the Trustee’s position, in light of duty of care and sympathy shown by three of the Scheme’s Trustee Directors.

Ombudsman’s decision

5 CAS-29766-K3N5 I do not uphold Mr L’s complaint.

Anthony Arter

Pensions Ombudsman 20 February 2020

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Appendix Rule 6.2 states:

“A Member entitled to preserved benefits may choose to start receiving them before Normal Pension Age (but not before reaching Minimum Pension Age, unless the Trustee are satisfied that the Member is suffering from Incapacity)…”

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