Jaguar Pension Plan · CAS-50949-Z3M6

CAS-50949-Z3M6

Ombudsman’s Determination Applicant Mr R

Scheme The Jaguar Pension Plan (the Scheme)

Respondents Jaguar Land Rover Pension Trustees Limited (the Trustee) Mercer Limited (Mercer)

Outcome

Complaint summary Mr R has complained that he was given incorrect figures when considering his retirement. He says he relied on these figures when making his decision to take voluntary redundancy and retire early. He is seeking for either the Trustee or the administrator, Mercer, to make good the shortfall in income between that which was mistakenly stated to him and that which he has now been correctly quoted.

He is also generally unhappy that JLT Benefit Solutions Limited (JLT), now part of Mercer, made several errors in its handling of his retirement and subsequent complaint, and says that it has failed to provide a reasonable solution despite suggestions that it would.

Background information, including submissions from the parties

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“This statement shows your pension benefits as they stood as at 5 April 2018. The figures are provided for information only and do not create any entitlement to benefit.”

“Member called as he is looking at redundancy with Jaguar and needs to know all his options.

He would like a TV value for his DB DC and AVC and wants it confirmed if that includes his purchased years of service.

Member would also like a retirement quote for 56 and 57, advised may not be able to get the quote for 57.

Advised the 10-15WD SLA and by 2nd class post shortly after.

Advised him with the TV value that because he had one previously they may deny his request and just provide a copy.”

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“Thank you for contacting us with regard to your pension entitlement.

We are currently unable to provide you with the requested information. However, I can confirm that there are a number of sources of information available now and coming very soon which can help you to make your decision to apply for Voluntary Redundancy.

• Your Pension Statement issued in 2018 will show you your available benefits if you had taken your pension at 5 April 2018. If you were under 55 on 6 April 2018 then you can use your accrued benefits to estimate the pension benefit available to you.

• The new Defined Benefit Pension website BenPal will be available in the week commencing 4th February and you will be able to get up to date pension quotes, transfer values and lots more information about your pension plan.

• Transfer value illustrations are currently unavailable but will re-open on 1st February 2019. If you are considering transferring your benefits out of the scheme then the fastest way to get an accurate Transfer Value illustration is through BenPal once this is available.”

“Called as Benpal link not working, was taking through to login page with out [sic] the verification process.

Two links sent, tried most recent one which was invalid and member only received one.

Sent new activation link and said to call back if same issue persists.”

“Member called in regards to Benpal

Unable to get quotes for 09/04/2023 and 09/04/2019

Explained new system – high traffic at the moment. 3 CAS-50949-Z3M6 Completed quotes over the phone.

No further updates.”

“1. My application for voluntary redundancy has been approved, what do I need to do next? If your application for voluntary redundancy has been approved, you will receive a letter via email confirming the approval and outlining the terms of your Voluntary Redundancy. You are required to sign and submit this to HR Direct by 7 March 2019 in order to confirm your acceptance of the Voluntary Redundancy arrangements. Please be aware, the Voluntary Redundancy offer is discretionary and the Company reserves the right to formally withdraw the offer if it is not accepted by this deadline.

…

2. What do I do if I no longer wish to accept voluntary redundancy? If you have reconsidered your application and no longer wish to accept voluntary redundancy, please contact HR Direct on [telephone number].”

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“I am writing to provide a further update on your complaint. 6 CAS-50949-Z3M6 Based on the information provided to me I am upholding your complaint and have been in discussion with JLT about how the situation might be rectified. As a result of those discussions, JLT have requested that a face to face meeting is arranged with yourself and the MD of the Employee Benefits Division to agree an appropriate course of action.

JLT will be contacting you in short order to arrange the meeting.

As a result of this development, I will suspend your complaint until the outcome of the meeting is known and it is clear whether a mutually acceptable outcome has been possible.

…I will be passing your papers to…who is taking over from me and is copied to this email and he will conclude the process at the appropriate time.”

According to Mr R, also on 6 January 2020, he chased the JLT representative for a compensation offer as it was agreed in their meeting that this day was the deadline. He says he did not hear back until 9 January 2020 when he was told that the JLT representative could not make their scheduled meeting of 10 January 2020 but that this would be rescheduled for the next week. Mr R says this meeting was never rescheduled.

On 6 February 2020, Mr R’s solicitors (the Solicitors) wrote to JLT, saying that they had been instructed to pursue Mr R’s claim against JLT asking for damages arising out of its breach of duty by providing Mr R false pension rights figures on 18 January 2019. They said that Mr R relied on these figures in deciding whether to accept VR by 25 January 2019. They highlighted that Mr R’s final pension figures provided on 6 January 2020 appeared to be grossly less. Finally, they asked JLT to confirm its proposals in relation to compensating Mr R, given that JLT had “accepted liability.”

On 10 March 2020, the JLT representative replied. In summary, he said:-

• JLT had no record of Mr R being issued with pension figures on 18 January 2019. It did however write to Mr R on 25 January 2019 to inform him that pension entitlement information would be available in early February. It said that until such

7 CAS-50949-Z3M6 time, his most recent pension statement, issued in 2018, showed an estimate of £11,962 per annum.

• On 4 February 2019, a full pension quotation of £19,904 was produced (the February Quotation). Unfortunately, this was overstated due to an inaccurate calculation relating to the two transfers-in received. A revised quotation was issued on 9 August 2019, outlining Mr R’s true entitlement to a full pension of £16,196 per annum (or a reduced pension of £11,493 plus tax free cash).

• Following the 6 January 2020 meeting, Mr R was provided with retirement options. Again, these reflected his correct entitlement.

• An overquote did not, in itself, create an entitlement to a higher quoted benefit. Further, JLT’s alleged admission of liability was denied.

• In the meeting, it was explained to Mr R that he would have to provide evidence of financial loss having reasonably relied upon the overstated quotation. Mr R had mentioned university expenses for his daughter but it was not accepted that this was payable presently. In the meeting, other examples of evidence that Mr R would need to have were outlined. There was insufficient evidence as it stood that Mr R had relied on the February Quotation or that he had suffered a financial loss.

• In order to consider Mr R’s assertion, it would require: (1) Details of the redundancy payment Mr R received; (2) copies of communications between Mr R and the Company prior to the February Quotation regarding his employment prospects and/or VR; and (3) copies of communications regarding his employment prospects and/or VR and any evidence of financial planning.

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Mr R subsequently voiced his concerns to the new Pensions Manager of the Company. In reply, the Company said it needed further evidence to establish if compensation was payable. For this reason, the decision made by the previous Pensions Manager to uphold Mr R’s stage one complaint had been overturned.

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“(a) Details of the redundancy payments [Mr R] received from the Company and confirmation of what he has done with those sums;

(b) Copies of communications between [Mr R] and the Company prior to the February Quotation regarding his employment prospects and/or voluntary redundancy, including notes of meetings (including any performance reviews/appraisals) or calls;

(c) Confirmation (together with any supporting evidence) of the steps [Mr R] took as a result of his stated reliance on the February Quotation, including (but not limited to):

(i) Any evidence of financial planning he carried out based on the February Quotation, including notes of meetings or calls; and

(ii) Confirmation (together with any supporting evidence) of the factors he took into consideration when deciding whether to accept voluntary redundancy.

3.2 We have also previously requested details of [Mr R’s] financial circumstances, including available capital and income. This includes copies of bank statements, details of savings accounts, regular bills, rent/ mortgage payments and anything else documenting [Mr R's] financial commitments.

3.3 We ask that [Mr R] be forthcoming on these points in order to enable the parties to move forward.”

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“The benefits quoted are estimated, based on the information available at the time of the quote. The benefits payable may be higher or lower than that stated if any information changes.

In preparing the estimate, care has been taken to reflect the most accurate and up to date information available at the time of preparation. The final benefits payable will always be subject to the Trust Deed and Rules of the pension arrangement, any discretion exercisable by the Trustees, all prevailing legislation, up to date earnings information and, where relevant, any restrictions necessary to comply with State pension requirements (such as the amount of cash sum).

Importantly, if any parts of the benefits are based on financial conditions at the time benefits are actually payable (such as investment market conditions and annuity rates), it should be recognised that the final benefits could be reduced from those shown. If unchangeable financial decisions are to be made based on this illustration you are reminded that this is an estimate of your benefits only and you should seek clarification as to the extent to which the details contained in the estimate could change.”

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• Funds to replace JLT/Mercer’s mistake: £19,904 - £15,847 = £4,057 per annum plus growth of RPI each year. Applying JLT’s own conversion factor (which it used when reducing a pension) and drawing the cash free amount for 38.2 years, his calculations equated to £154,977.40 plus growth of RPI (lump sum).

• “The following is what would be needed to buy back the equivalent lost right.

(i) If a RPI average growth factor of 2% pa was used this would equate to £227,658 lump sum.

(ii) If a RPI average growth factor of 3% pa was used this would equate to £280,579 lump sum.”

• Pension payments reinstated back to his leaving date, £15,847 per annum times two years and a number of months (to be confirmed).

• Reimbursement of all costs incurred by him directly related to pursuing this claim. This included legal advice, stationery, postage and recorded mail charges.

• Compensation for extreme stress and anxiety for him, his wife and his two daughters. They had all had to change their way of life directly because of JLT’s failure to carry out its duties and responsibilities correctly and because of the unnecessary and avoidable delays it caused.

• Other consequences included loss of bank interest and the lifetime tax free status on their savings ISAs, that had been cashed in to live on.

• Compensation for the commitment that he made to his daughter that was as a direct result of JLT’s pension offer made in May 2019 of £22,749 per annum, resulting in a commitment to his daughter for university support of £3,000 for three years (£9000).

• Costs incurred by the Ombudsman service, which were to be confirmed.

In response to an information request made to the Trustee by the Adjudicator, it said:-

• Once the application for VR was made by Mr R in March 2019, the decision was irreversible.

16 CAS-50949-Z3M6 • The estimate provided on 14 June 2019 would have been incorrect; it appeared that the first set of correct figures was provided in August 2019.

Mr R in response said that employees were told by their managers that they could rescind their application to take VR. He said he had heard that several people had done this including one person that left on Friday 29 March 2019, changed their mind on 30 March 2019 and returned to work on 1 April 2019.

The Pensions Ombudsman’s position on the provision of incorrect information

This section sets out the Ombudsman's views very generally on the application of negligent misstatement, estoppel and maladministration. It is for guidance only; every case depends upon its own facts. The facts of this particular complaint are considered in the sections which follow.

The starting point where incorrect information has been provided is that a scheme is not generally bound to follow incorrect information, a member is only entitled to receive the benefits provided for under the scheme rules. For example, if trustees have given inaccurate early retirement quotes, the quotes would not generally be binding.

Broadly, the Ombudsman will provide redress from a negligent misstatement if it can be shown that financial loss has flowed from the incorrect information given that the member reasonably relied on that incorrect information. For example, the member may have acted differently in the expectation of receiving the higher benefits, such as retiring early.

As to estoppel, the Ombudsman will not allow either party to rely on a fact contrary to that which they have previously represented, or contrary to a common assumption that something is accurate, if it would not be fair to do so. This may mean that a respondent will be prevented from arguing that something that they said before was wrong and will, instead, have to give benefits as if what was said were accurate.

Regardless of whether compensation is awarded for negligent misstatement or estoppel, the Ombudsman may award some compensation for distress and inconvenience, if what was done amounted to maladministration. Maladministration covers various different types of problems or failings in how a scheme is administered or how members are dealt with.

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Mercer subsequently confirmed that it was not able to trace the January 2019 and February 2019 calls. It attached a copy of a Frequently Asked Questions document (the FAQ document) that its call agents use as a guide in answering member’s questions.

Mr R provided his comments on the FAQ document as well as his dispute generally, highlighting that it was poor that Mercer had not been able to find the call recordings and that it appeared to have deviated from its own procedure as set out in this document. He added that Mercer had continually delayed my Office’s investigation of his complaint.

Mr R’s additional final comments on the matter were:-

• He was disappointed but not surprised that Mercer had lost these valuable records as it had lost other mandatory documents before.

• He wished to ensure that no one else suffered in the way he had over the last three years and wished to understand if there were any avenues through my Office where his experience could be used to help improve pension trustee services and processes for others.

• The FAQ document clearly showed that the conversations he had with Mercer in January and February 2019 must be recorded and that all figures plus workings must be placed on file.

• Mercer having lost important documents, key evidence and its denial of the truth was convenient for them as the law allowed it to “get away with a small token fine of £1,500.”

The complaint has now been passed to me to consider and I agree with the Adjudicator’s Opinion, except I am going to increase the award for the gross maladministration in respect of the woefully inadequate service provided by Mercer. I will also respond to the additional points made by Mr R.

Ombudsman’s decision

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Directions

Anthony Arter

Pensions Ombudsman 27 June 2022

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