In two recent cases the Pensions Ombudsman has found trustees to be guilty of maladministration for delays in making transfer payments despite them being completed well within the statutory six-month timeframe. Although very different on their facts, both cases highlight the importance for trustees and scheme administrators of having efficient systems in place to make sure all transfer requests are dealt with as quickly as possible. This need for speed has to be balanced against the increasing due diligence obligations to guard against pension liberation.

In the Optimum case, the Ombudsman found that one month was the appropriate period for the payment of the transfer value. It is not the first time that trustees have been found to be guilty of maladministration despite being within the statutory time limit, but one month is pretty tight. However, in this case the transfer was of a money purchase benefit going to a major provider (Legal & General) and there had been a lot of correspondence about the transfer in the months leading up to the formal application, so it is not a completely surprising decision on its facts.

Another interesting point in the Optimum decision is that the member was also asked, but refused, to sign a broad disclaimer (in addition to the scheme's standard discharge form). The Ombudsman found that the trustee could not justify delaying the transfer until the disclaimer had been signed and, indeed, had no right to request the additional disclaimer at all saying that:"it is an attempt to 'settle' any potential possible claims against them in respect of anything that they may have done in return for doing something they have no legal right to refuse."

Although this case did not concern suspected liberation, it is a clear indication that the Ombudsman is unlikely to allow trustees to attempt to shift liability for a potentially unauthorised transfer by asking the member to sign a broad disclaimer.

In the second case, Kodak, the Ombudsman found the trustees to be guilty of unreasonable delay of about six weeks in effecting a transfer value, despite it being made well within the statutory period. The delay resulted in the member missing the guarantee date for an annuity quote. The trustees were ordered to purchase an additional annuity for the member to make up the difference between the annuity the member could have purchased had there been no unreasonable delay and the annuity he actually purchased (nearly £500 per annum).

This seems a fairly harsh decision for the trustees on the facts as reported. The member was a pensioner, and strict HMRC rules apply to the transfer of a pension in payment. Checks had to be done with HMRC to ensure the transfer would be "recognised" and the trustees had to chase HMRC for the information they required. The trustees were at the same time trying to arrange a rescue of the scheme to avoid PPF entry (resulting in a fairly well publicised bulk transfer to a new "Kodak 2" scheme). This case shows the importance for trustees of tightly managing individual issues, even where there are much bigger scheme-wide problems to deal with.

The appropriate time frame for a transfer payment will depend on the facts of each case. In another recent decision the Ombudsman found that it was not maladministration for trustees to breach the statutory time limit. In Brackley, he found that delays (including reconciling GMPs and obtaining legal advice on revaluation) were reasonable even though they resulted in the member not being able to transfer his benefits to his chosen qualifying registered overseas pension scheme as it had been delisted by the time the trustees were ready to make the transfer.

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