Overcautious Approach Means Compensation for Pension Scheme Member
With significant losses being reported in 'pension transfer scams', it is no surprise that when the administrators of a pension scheme receive a request to transfer a pension to a new scheme, they are expected to conduct an appropriate due diligence process.
However, the trustees are also under a duty not to procrastinate over the transfer. The combination of obligations recently led to a decision by the Pensions Ombudsman in favour of a man whose transfer of his self-invested personal pension was delayed several months when the scheme administrators engaged in an excessively lengthy and detailed approach to complying with their regulatory obligations.
The transfer was being made to a large, well-established pension scheme of which the man was already a member. The confirmation of the scheme's registration had been given by HM Revenue and Customs, but the 'tick box' approach of the pension scheme trustees dealing with the request caused considerable delay and – presumably on a rising market – financial loss to the pension scheme member.
The Ombudsman ordered that compensation be paid.