Aviva Section 32 Buyout Policy · CAS-61480-S5S2

CAS-61480-S5S2

Ombudsman’s Determination Applicant The Estate of Mr N (the Estate)

Scheme Aviva Section 32 Buyout Policy (the Policy)

Respondent Aviva

Complaint Summary

Summary of the Ombudsman’s Determination and reasons

1 CAS-61480-S5S2

2 CAS-61480-S5S2

3 CAS-61480-S5S2

4 CAS-61480-S5S2

On 24 September 2020, Aviva telephoned the IFA to inform that it could only pay Mrs N a death benefit lump sum of £142,258.20 and a spouse’s pension of £14,226.40 per annum instead of a total amount of £664,140.76. Although it recognised there was a delay in providing the SIHLS quotation, Mr N was no longer alive to submit a signed serious ill health claim or transfer request. It also told the IFA that “although the lump sum is significantly lower on death than it is on serious ill health, the widow’s pension is significantly higher (and there’s a cost to this obviously).”

5 CAS-61480-S5S2

6 CAS-61480-S5S2

6.5% net (8.125% gross of basic rate tax) - a total net return of 32.3% for the period. A

7 CAS-61480-S5S2

8 CAS-61480-S5S2

9 CAS-61480-S5S2

10 CAS-61480-S5S2

11 CAS-61480-S5S2

Dominic Harris

Pensions Ombudsman 14 October 2024

12 CAS-61480-S5S2 Appendix 1

Extract from the Policy’s ‘General Provisions’

“V. The policy may be assigned or surrendered but only on the conditions set out in regulation 2 of the Occupational Pension Scheme (Discharge of Liability) Regulations 1985. Subject to certain requirements, these conditions include provision for (a) a transfer into an occupational pension scheme or a personal pension scheme or (b) the replacement of the Policy by another policy or contract which is appropriate within the meaning of section 52C (4) of the Social Security Pensions Act 1975.

…

If this General Provision is invoked:-

(a) The whole of the value of the Policy shall be transferred or surrendered and

(b) Payment of the value of the Policy to the trustee, administrator or (where appropriate) insurer of the receiving arrangement will discharge the Society from all liability to provide benefits under the Policy.”

13 CAS-61480-S5S2 Appendix 2

Revised timeline provided by Aviva based on standard SLA prior to Covid pandemic.

7 June 2019 IFA called Aviva and requested a vesting quotation for the Policy.

12 June 2019 Aviva sent the IFA a retirement quotation.

2 October 2019 IFA requested a transfer form.

8 October 2019 Aviva issued a transfer form to the IFA.

8 January 2020 Aviva received a letter from the IFA requesting FPD.

10 January 2020 Aviva received a letter from the IFA requesting FPD for other policy.

16 January 2020 Aviva issued FPD for the other policy.

18 January 2020 Aviva issued FPD for the Policy.

5 February 2020 Aviva issued transfer quotation for the Policy

25 June 2020 IFA requested serious ill health quotation. (normal service level agreement (SLA) is 10 working days for a response)

9 July 2020 (10 working days later) Aviva issued serious ill health quotation to IFA.

30 July 2020 IFA telephoned Aviva to notify of Mr N’s death.

Aviva’s annotation:

“It is not possible to establish exactly when the FA/PH would have returned the completed Seriously Ill Health Forms as these were never returned however it is important to note that the FA did not return the forms for the other policy prior to date of death, despite having these. Further to this, once we had issued the forms to the IFA it was then down to him to get these to the policyholder who would need to complete them and pass them to their Doctor to fill in a section of the form before they could return them to the IFA along with ID and post this back to Aviva. As this was the height of the Covid pandemic with Doctor’s over run and, it is very unlikely it would have been possible to get this done and the forms returned along with ID before the policyholder sadly died on 29th July 2020.”

14