Aegon Retiready Pension · CAS-70350-K4M9

CAS-70350-K4M9

Ombudsman’s Determination Applicant Mrs T

Scheme Aegon Retiready Pension (the Scheme)

Respondent Aegon UK (Aegon)

Outcome

Complaint summary

Background information, including submissions from the parties

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3 CAS-70350-K4M9 “Your circumstances can change, so it’s important to take an active interest in shaping your retirement plans to make sure that they’re still right for you. We recommend that you:

• regularly review your product, investment choices and retirement goals, and

get advice or guidance about the retirement options available to you…”

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On 10 March 2021, Mrs T telephoned Aegon and complained that her benefits had been mismanaged, causing investment loss. So, she wanted the fund value of £7,290.80 quoted on 31 January 2021 to be honoured.

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Adjudicator’s Opinion

• Mrs T has provided no evidence to support her assertion that Aegon said an annuity would not be an appropriate option for her at retirement. Aegon was, in any case, simply required to provide important factual information regarding Mrs T’s retirement options and answer the specific enquiries that she raised.

• In the Adjudicator’s view there was no requirement for Aegon to ask Mrs T for her retirement option before her SRD or consider her individual circumstances and guide her towards avoiding the Balance Lifestyle Fund. Such guidance would have amounted to financial advice, which Aegon was not authorised to provide.

• During the telephone call on 16 April 2019 Mrs T said that an annuity would not be suitable due to her relatively small fund value. However, by that time the call handler had already quoted Mrs T’s other retirement options. The call handler also confirmed that Mrs T’s latest fund value of £6,188.27, quoted the previous day, was not guaranteed, since it was subject to fluctuations in the stock market.

• Mrs T was given the option of either switching funds within the Scheme or transferring to another provider if she was unhappy with the performance of her investments at the time. In the Adjudicator’s opinion the call handler provided sufficient information in response to the specific enquiries that Mrs T raised. In the Adjudicator’s view it was for Mrs T to consider this information and make alternative investment choices if she felt it was necessary. Mrs T could also have sought independent financial advice if she remained unclear on the subject. The 2015 Quotation had previously encouraged her to do so.

• The February 2016 Letter and the attached leaflet pointed to the Scheme’s terms and conditions which clarified the way in which lifestyle strategies including the Balanced Lifestyle Fund operate. Aegon’s email of 4 March 2021 adequately explained the reasons for the fund value reduction that Mrs T has referred to, especially in the absence of any evidence to the contrary provided by Mrs T. Further, Mrs T’s investments changed over time in accordance with the features of 8 CAS-70350-K4M9 the lifestyle strategy. So, in the Adjudicator’s view Aegon cannot be held responsible for the investment loss that Mrs T has claimed.

• Upgrade Letter 1, Upgrade Letter 2 and Upgrade Letter 3 made it clear that Mrs T would automatically continue to invest in the Balanced Lifestyle Fund following the upgrade, unless she opted out of that process. In the Adjudicator’s opinion there is no evidence that Aegon expected members to seek financial advice regarding their investments in the Scheme unless they wished to. Instead, Aegon recommended independent financial advice for Mrs T because investment and retirement options can be complex issues. Mrs T could also have sought free and impartial guidance from Pension Wise as stated in Wake Up Pack 1 and Wake Up Pack 2.

• Mrs T could have contacted Aegon to enquire about the Balanced Lifestyle Fund at any time before reaching her SRD, if she was unsure how it worked. Section 4.5 of the Scheme’s terms and conditions also included details of how such lifestyle strategies operate, as confirmed in the February 2016 Letter. That letter also included a link to Aegon’s website for Mrs T to use in accessing the information. Aegon cannot be held responsible if Mrs T chose not to make any such enquiries regarding the Balanced Lifestyle Fund.

• Wake Up Pack 1 and Wake Up Pack 2 were only intended to alert Mrs T to the fact that she should be considering her retirement options if she had not already done so. Both letters referred Mrs T to the Portal for further related information. Alternatively, Mrs T could have telephoned Aegon to ask for assistance. In the Adjudictor’s view there was no requirement for Aegon to personalise Wake Up Pack 1 and Wake Up Pack 2. It was for Mrs T to consider her own personal circumstances based on all the information and resources provided by Aegon.

Aegon accepted the Adjudicator’s Opinion, Mrs T did not, and the complaint was passed to me to consider. Mrs T and Aegon provided further comments which do not change the outcome. I agree with the Adjudicator’s Opinion and note the additional points raised by Mrs T and Aegon.

Mrs T’s additional comments

During the telephone call on 16 April 2019 the call handler failed to mention the Balanced Lifestyle Fund and said that Aegon had ceased providing annuities. She had also not received any fund factsheets regarding the Balanced Lifestyle Fund with her annual benefit statements or around the time of the upgrade.

There was a further call during which she requested a password reset for the Portal and Aegon said that an annuity would not be an option due to her relatively low fund value.

Aegon ought to have made her aware that it had ceased providing annuities at the time the change was implemented, as the Balanced Lifestyle Fund was geared towards purchasing an annuity at retirement. 9 CAS-70350-K4M9 Her Aegon pension did not become due for payment automatically at the SRD; she needed to make a retirement claim to receive the benefits. She would not have known this, had she not telephoned Aegon on 16 April 2019 and received this information.

Aegon’s retirement process was different to that of two occupational schemes she had retired under. Her Aegon fund value was only around £6,000 and she was unable to consolidate those benefits in either of the two occupational schemes. Aegon ought to have provided better customer service and communications.

She decided that it would not be worth making a retirement claim under the Scheme in 2016 since 75% of the benefits would have been taxable at the higher earnings rate of 40%. Instead, she planned to leave the benefits deferred until age 65, due to the state pension not being payable until age 66.

She decided not to seek assistance from a financial adviser due to her relatively small fund value, because she does not trust financial advisers, and due to the fees that would have been involved.

The investment loss she suffered shortly before her SRD caused distress and inconvenience that has not been recognised by Aegon. She had no clear understanding of what caused that outcome and felt that something “untoward” must have occurred.

Aegon’s additional comments

Aegon ceased providing annuities in 2016. However, an agreement was reached with Legal & General that it would provide that option to Aegon members with a contractual right to an annuity. Otherwise, those members could apply for an annuity with another pension provider via the open market.

On 28 December 2017, Mrs T did make a second call requesting a password reset for the Portal. The call handler also confirmed the process involved in claiming a pension lump sum, and that Mrs T’s retirement benefits would not be paid automatically at the SRD. She would need to submit a retirement claim.

Ombudsman’s decision

Mrs T submits that during the telephone call on 16 April 2016, the call handler failed to mention the Balanced Lifestyle Fund. Mrs T said she had also not received any fund factsheets regarding the Balanced Lifestyle Fund with her annual benefit statements, or around the time of the upgrade. I note that from the time of joining the Scheme in 2004, Mrs T invested in the Balanced Lifestyle Fund. In 2015, Upgrade Letter 3 confirmed that this would remain the case since Mrs T had elected not to opt 10 CAS-70350-K4M9 out of the upgrade. So, Mrs T ought to have been aware of this investment and if she was dissatisfied with it, she could have reviewed her options or contacted Aegon for further information.

I accept that the call handler did not specifically refer to the Balanced Lifestyle Fund during the telephone call on 16 April 2016. However, the call handler did correctly explain that Mrs T’s underlying investments were subject to fluctuations in the stock market, and that the benefits quoted at the time were not guaranteed.

Since Mrs T had clearly invested in the Balanced Lifestyle Fund, it was for her to ask for clarification on this point if required. There is no evidence that Mrs T made any such enquiry during the call, or by contacting Aegon at a later date. Mrs T could also have checked for further information via the Portal. I find that there was no requirement for Aegon to provide unsolicited information regarding the Balanced Lifestyle Fund to Mrs T with her annual benefit statements or at any other time.

Mrs T contends that Aegon ought to have made her aware that it had ceased providing annuities at the time of the change. Aegon has confirmed that it ceased providing annuities in 2016. However, Aegon did make provision for members, including Mrs T, who had a contractual right to purchase an annuity at retirement, to do so via Legal & General. Alternatively, Mrs T could have applied for an annuity via another pension provider. I find that there was no requirement for Aegon to confirm that it had ceased offering its own annuity policy. There is also no evidence that Aegon told Mrs T an annuity would not be appropriate in her case.

Mrs T submits that she decided not to make a retirement claim in 2016 for tax reasons. Instead, she planned to leave the benefits under the Scheme deferred until age 65 in 2021. I consider that this shows Mrs T had sufficient time to make any enquiries or investment changes she required before reaching the SRD. This point is especially pertinent since Mrs T also said that Aegon’s retirement process is different to that of the two occupational schemes she had previously retired under. I find that it was for Mrs T to consider these issues and take appropriate action to resolve any concerns she may have had before the SRD. There was no requirement for Aegon to consider Mrs T’s personal circumstances and advise her accordingly.

Further, Aegon sent Wake Up Pack 1 to Mrs T on 31 January 2021, several months before her SRD. It was intended to remind Mrs T that she should consider her retirement options. The letter also confirmed that her fund value was not guaranteed, that further retirement information was available via the Portal, and that she could obtain free guidance via Pension Wise. Wake Up Pack 2, which was sent to Mrs T on 14 March 2021, then reiterated the details regarding the Portal and Pension Wise. I find that Wake Up Pack 1 and Wake Up Pack 2 included sufficient information that ought to have alerted Mrs T to consider reviewing her investments and retirement options under the Scheme prior to her SRD.

Mrs T has also complained that the perceived investment loss she suffered shortly before her SRD caused distress and inconvenience that has not been recognised by

11 CAS-70350-K4M9 Aegon. I note that Mrs T’s fund value was not guaranteed and Aegon informed her of this on numerous occasions before her SRD. I appreciate that the drop in value was unfortunate, however this did not result from Aegon providing poor customer service or communications regarding her investments and retirement options under the Scheme. I do not find that Aegon committed any maladministration. I sympathise with the frustration, distress and inconvenience which Mrs T has undoubtedly suffered, and may have been caused, in part, by not properly considering the warning that investments fluctuate, and unfortunately, they dipped at the time when Mrs T was considering retirement.

I do not uphold Mrs T’s complaint.

Anthony Arter CBE

Deputy Pensions Ombudsman 19 December 2023

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