Bnla Citibank Unit Linked Executive Pension Plan · CAS-74047-R0M5

CAS-74047-R0M5

Ombudsman’s Determination Applicant Ms N

Scheme BNLA (Citibank) Unit Linked Executive Pension Plan (the Plan)

Respondent “K” Ltd

Complaint Summary Ms N has complained that K Ltd unreasonably delayed the transfer of her pension benefits, which were held in a policy (the Policy) under the Plan. Ms N said the delay caused her an investment loss and prevented her from drawing from her benefits at the age of 55.

Summary of the Ombudsman’s Determination and reasons The complaint is upheld because K Ltd has not presented any legal basis on which it was able to deny the transfer of Ms N’s benefits, nor has it given a reasonable explanation for the delay.

Detailed Determination Material facts

The sequence of events is not in dispute, so I have only set out the main points. I acknowledge that there were other exchanges of information between the parties.

The Plan is an executive pension plan. K Ltd is the trustee of the Plan and was the legal owner of the Policy. Mr N is the director of K Ltd and is also Ms N’s ex-husband. Ms N had at one point been the company secretary of K Ltd and is recorded by Companies House as having resigned from this position on 14 March 2003.

The Policy was administered by Sun Life Financial of Canada (SLFoC).

On 2 November 2018, K Ltd telephoned SLFoC regarding concerns that Ms N was trying to access funds in the Policy. K Ltd’s intention was to establish who had legal entitlement to these funds.

On 10 November 2018, SLFoC wrote to K Ltd. SLFoC explained that although K Ltd had paid into the Policy on Ms N’s behalf, the benefits were intended for Ms N.

1 CAS-74047-R0M5 SLFoC added that if Ms N wished to access the funds, Mr N would need to sign the relevant forms, on behalf of K Ltd, as he was the director of the company that acted as trustee of the Plan.

On 18 February 2019, SLFoC received a request, via the Origo system, to transfer Ms N’s benefits.

On 20 February 2019, SLFoC wrote to K Ltd. It confirmed that Ms N had made a transfer request. It asked K Ltd to provide authority for the transfer to proceed.

On the same day, SLFoC wrote to Ms N. It explained that an authorised signatory for K Ltd would need to sign the relevant section of the transfer form. Once completed, it could proceed with the transfer of her benefits.

As at 22 February 2019, the transfer value for the Policy was £32,481.91. This was confirmed by SLFoC.

On 1 March 2019, Horne Engall & Freeman LLP (HE&F), solicitors acting for K Ltd, wrote to Ms N. It said that K Ltd did not agree to the transfer of Ms N’s benefits in the Policy. It added that if she made any further attempts to transfer these benefits, K Ltd would apply for a ‘freezing’ injunction and the matter may be reported to the police.

On 20 March 2019, SLFoC wrote to Ms N. It said that her transfer had not gone ahead, because it was awaiting the necessary authority from K Ltd. It could not proceed until this was received. SLFoC explained that K Ltd was the employer when the Policy was taken out and it also acted as trustee. Ms N was the beneficial owner of the Policy and K Ltd was the legal owner.

On 8 April 2019, HE&F wrote to SLFoC. HE&F enclosed a copy of a Court Order, dated 17 February 2005, between Mr N and Ms N (the 2005 Court Order). HE&F asserted that the provisions of the 2005 Court Order meant that Ms N had no claim to the Policy.

On 17 April 2019, SLFoC wrote to HE&F. SLFoC explained that although K Ltd was the legal owner of the Policy, it had a duty as trustee to provide pension benefits to Ms N. SLFoC confirmed that the Policy would not fall under any pension sharing arrangement for Mr N and Ms N’s divorce.

On 20 May 2019, HE&F wrote to SLFoC. HE&F enclosed information in relation to what was referred to as Ms N’s dismissal, on 7 March 2003, from her former position with K Ltd. HE&F asserted that due to the nature of Ms N’s alleged dismissal, she was not entitled to the benefits in the Policy. It referred to a ‘Product Particulars’ document for the Plan (the Product Particulars) which included the statement:

2 CAS-74047-R0M5 “The Member is entitled to the benefit of all contributions into the Plan (whether his own or on his behalf by the Employer) in the form of a pension. Contributions cannot be refunded to, or taken away from the Member, unless dismissed for fraud or misconduct.”

On 8 July 2019, SLFoC wrote to HE&F. SLFoC set out its position that there was nothing within the rules of the Plan that enabled K Ltd to withhold Ms N’s benefits.

Following the referral of the complaint to The Pensions Ombudsman (TPO), K Ltd maintained its position that Ms N was not entitled to the benefits in the Policy, due to her alleged dismissal.

In a letter dated 28 March 2023 (the March 2023 Letter), it was explained to K Ltd’s legal representative that the Plan was governed by a Trust Deed and Rules, and in the event of any conflicting statements, the Trust Deed and Rules would override anything within the Product Particulars. Further, under the Pensions Act 1995, it would need to be shown that Ms N owed K Ltd some monetary obligation as a consequence of an alleged criminal, negligent or fraudulent act or omission. It was not sufficient to rely on Ms N’s purported dismissal as the reason for refusing to allow the transfer of her benefits. The 2005 Court Order did not cover any claims against K Ltd in respect of the Policy. It was also noted that the 2005 Court Order stated that Ms N had resigned from her position at K Ltd, as opposed to having been dismissed.

A follow up letter to the March 2023 Letter was sent to K Ltd’s legal representative on 18 May 2023 (the May 2023 Letter). Copies of both letters are included in the Appendix.

On 13 June 2023, HE&F informed TPO that K Ltd no longer opposed the transfer of Ms N’s benefits out of the Policy. Clearly, by now a considerable amount of time had passed since Ms N had made her transfer request.

On 30 November 2023, Mr N, on behalf of K Ltd, signed a transfer form for the Policy. This provided the necessary trustee authority for the transfer of Ms N’s benefits.

On 29 January 2024, SLFoC transferred £44,393.09 to Ms N’s Interactive Investor SIPP.

On 8 February 2024, Ms N took a lump sum payment of £11,098.27 from her Interactive Investor SIPP.

Summary of Ms N’s position

She is pursuing the complaint in relation to her alleged financial loss, caused by the delay to the transfer, and the distress and inconvenience she has suffered.

In the months following the transfer of her benefits to her Interactive Investor SIPP, and the drawing of her tax-free lump sum, she made a number of share and foreign currency trades. She has submitted details of these investments in support of her claim for redress for her alleged financial loss.

3 CAS-74047-R0M5 Summary of K Ltd’s position

There has been no explanation provided as to why it took until 30 November 2023 for trustee authority to be provided on behalf of K Ltd, when HE&F had confirmed on 13 June 2023 that K Ltd accepted that the transfer should go ahead.

Preliminary Decision

Conclusions

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Directions

Within 28 days of the date of this Determination, K Ltd shall pay distress and inconvenience that she has suffered.

Dominic Harris Pensions Ombudsman 26 May 2025

6 CAS-74047-R0M5 Appendix 1 – The March 2023 Letter

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13 CAS-74047-R0M5 Appendix 2 – The May 2023 Letter

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16 CAS-74047-R0M5 Appendix 3 – Extracts from The Occupational Pension Schemes (Transfer Values) Regulations 1996 “1 Citation, commencement and interpretation…

(2) In these Regulations, unless the context otherwise requires—

…“appropriate date” has the meaning given to that expression in section 97(3A) of the 1993 Act…

…7C Manner of calculation of initial cash equivalents for money purchase benefits (other than collective money purchase benefits) and cash balance benefits not calculated by reference to final salary

(1) For cash balance benefits in respect of which the available sum is not calculated by reference to final salary and money purchase benefits other than collective money purchase benefits, the initial cash equivalent is to be calculated in accordance with this regulation.

(2) The initial cash equivalent is the realisable value at the date of calculation of any benefits to which the member is entitled.

(3) The trustees must calculate that realisable value—

(a) in accordance with the scheme rules; and

(b) in a manner which is—

(i) approved by the trustees; and

(ii) consistent with Chapter 1 of Part 4ZA of the 1993 Act.

(4) The realisable value must include—

(a) for money purchase benefits, any increases to the benefits resulting from a payment of interest made in accordance with the scheme rules; or

(b) for cash balance benefits—

(i) any interest (including notional interest) which, in accordance with the scheme rules, applies to the available sum in respect of which the benefits are calculated;

(ii) any guarantee which, in accordance with the scheme rules, applies to the available sum in respect of the benefits or to the contributions made by the member or by another person in respect of the member;

(iii) any options the member has which would increase the value of the member's benefits under the scheme (adjusted to reflect the proportion of members the trustees determine are likely to exercise those options); and

17 CAS-74047-R0M5 (iv) any discretionary benefits which the trustees determine should be taken into account, having regard to any established custom for awarding the benefits and any requirement for consent before they are awarded…

…10 Increases of cash equivalents on late payment

(1) Subject to paragraph (2), if the trustees of a scheme, having received an application under section 95 of the 1993 Act, fail to do what is needed to carry out what the member requires within six months of the appropriate date the member's cash equivalent, as calculated in accordance with regulations 7 to 9, shall be increased by the amount, if any, by which that cash equivalent falls short of what it would have been if the appropriate date had been the date on which the trustees carry out what the member requires.

(2) If the trustees of a scheme, having received an application under section 95 of the 1993 Act, fail without reasonable excuse to do what is needed to carry out what the member requires within six months of the appropriate date the member's cash equivalent, as calculated in accordance with regulations 7 to 9, shall be increased by—

(a) interest on that cash equivalent calculated on a daily basis over the period from the appropriate date to the date on which the trustees carry out what the member requires, at an annual rate of one per cent. above base rate; or, if it is greater,

(b) the amount, if any, by which that cash equivalent falls short of what it would have been if the appropriate date had been the date on which the trustees carry out what the member requires.”

18 CAS-74047-R0M5 Appendix 4 – Extracts from the Pension Schemes Act 1993 “95 Ways of taking right to cash equivalent

(1) A member of a pension scheme who has acquired a right to take a cash equivalent in accordance with this Chapter may only take it by making an application in writing to the trustees or managers of the scheme requiring them to use the cash equivalent in one of the ways specified below…

…(9) An application to the trustees or managers of the scheme under subsection (1) is to be taken to have been made if it is delivered to them personally, or sent by post in a registered letter or by the recorded delivery service…

…97 Calculation of cash equivalents

(1) Cash equivalents are to be calculated and verified —

(a) in the prescribed manner, and

(b) where a designation has been made under section 97A or 97B, in accordance with regulations under section 97C.

(1A) Where a member applies under section 95 to take a cash equivalent that relates to money purchase benefits, the cash equivalent is to be calculated by reference to the date of the application.

(2) Regulations may provide—

(a) that in calculating cash equivalents that relate to money purchase benefits account shall be taken—

(i) of any surrender, commutation or forfeiture of the whole or part of a member's pension which occurs before the trustees or managers of the scheme of which he is a member do what is needed to comply with what he requires under section 95;

(ii) in a case where subsection (2) of section 96 applies, of the need to deduct an appropriate amount to provide for the liabilities mentioned in subsection (3) of that section;

(aa) for a cash equivalent that relates to any category of benefits to be reduced so as to take account of the extent (if any) to which an entitlement has arisen under the scheme to the present payment of the whole or any part of—

(i) any pension; or

(ii) any benefit in lieu of pension;

and

19 CAS-74047-R0M5 (b) that in prescribed circumstances a cash equivalent shall be increased or reduced

(3) Without prejudice to the generality of subsection (2), the circumstances that may be specified by virtue of paragraph (b) of that subsection include—

(b) failure by the trustees or managers of the scheme to do what is needed to carry out what a member of the scheme requires within 6 months of the appropriate date; and

(c) the state of the funding of the scheme.

(3ZA) Where, in the case of an application from a member under section 95 that relates to money purchase benefits that are collective money purchase benefits, regulations under section 99(2)(c) provide for a period longer than 6 months, subsection (3)(b) is to be read as if the reference to 6 months were a reference to that longer period.

(3A) For the purposes of subsection (3), the “appropriate date” —

(a) in relation to a cash equivalent that relates to benefits other than money purchase benefits, means the guarantee date for the purposes of the relevant statement of entitlement under section 93A, and

(b) in relation to a cash equivalent that relates to money purchase benefits, means the date on which the trustees or managers receive an application from the member under section 95.”

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