Hyde Housing Association Limited Pension And Assurance Scheme Cas · CAS-82337-Q7V9

CAS-82337-Q7V9

Ombudsman’s Determination Applicant Mrs N

Scheme Hyde Housing Association Limited Pension and Assurance Scheme (the Scheme)

Respondent The Trustees of the Hyde Housing Association Limited Pension and Assurance Scheme (the Trustee)

Outcome

Complaint summary Mrs N’s complaint against the Trustee centres on the transfers she made into the Scheme in 2003 and 2004. She says that she was provided with incomplete information at the time of the transfers. She says that had she known that the additional service she was transferring into the Scheme would only count towards her annual pension and not her lump sum, she would not have proceeded with the transfers.

Mrs N has also complained that Hymans Robertson, the previous administrator of the Scheme, provided her with an incorrect retirement quotation in 2012, which significantly overstated her cash lump sum (lump sum) entitlement. She would like the Trustee to honour the lump sum figure presented in the incorrect retirement quotation.

Background information, including submissions from the parties Mrs N began employment with Hyde Housing Association Limited (Hyde Limited) in 2000 and joined the Scheme. She left Hyde Limited on 21 September 2001.

On 7 July 2003, Mrs N recommenced employment with Hyde Limited and rejoined the Scheme.

1 The Trustees of the Hyde Housing Association Limited Pension and Assurance Scheme CAS-82337-Q7V9 The Scheme is a hybrid occupational pension arrangement with both defined benefit and defined contributions elements. It is governed by a Trust Deed and Rules dated 21 December 2001 (the Scheme Rules).

Schedule 2 of the Scheme Rules provides that when a transfer-in is accepted into the Scheme, the benefits arising from this transfer will be provided as the Trustee decides on the advice of the Scheme actuary (See Appendix).

On 24 September 2003, Hymans Robertson, wrote to Mrs N confirming receipt of a Cash Equivalent Transfer Value (CETV) statement from the London Pensions Fund Authority (LPFA). The statement showed a CETV of £6,025, which would secure an additional one year and 10 months of service in the Scheme. Following this, Mrs N accepted the CETV quotation and Hymans Robertson confirmed that it had received the transfer payment from the LPFA, thereby completing the transfer (the 2003 Transfer).

On 7 May 2004, Hymans Robertson informed Mrs N that when she left pensionable service in 2001, she had not been offered the option to receive a refund of her contributions or to preserve her benefits in the Scheme. It explained that the Trustee had agreed to offer her this choice retrospectively. Following this, Mrs N opted to transfer her earlier service into the Scheme and Hymans Robertson calculated a CETV of £9,312, which would result in her securing additional service of two years and 9 months. Mrs N accepted this CETV quotation and shortly afterwards, Hymans Robertson confirmed in writing that this transfer had been completed (the 2004 Transfer).

On 14 September 2009, Mrs N ceased employment with Hyde Limited. Upon her departure, she was issued with a retirement quotation by Hymans Robertson which showed an annual pension of £5,228 and a lump sum of £5,428 (the 2009 Retirement Quotation). This quotation also offered Mrs N the option to obtain a reduced annual pension of £4,919 in exchange for a maximum lump sum of £8,457. These figures were based on her receiving payment at her Normal Retirement Date (NRD) on 29 August 2039.

In 2012, Hymans Robertson issued a retirement quotation to Mrs N which showed an annual pension of £5,445 and a lump sum of £14,931 (the 2012 Retirement Quotation). These figures were based on her receiving payment at her NRD.

In 2017, the Trustee engaged in internal discussions about how transferred-in service should be treated when calculating retirement benefits, in connection with the calculation of benefits for another member of the Scheme (the 2017 Internal Dialogue). Although the Trustee was unable to locate any documents explicitly setting out the calculation method to be applied where a member had transferred service into the Scheme from another pension arrangement, it noted that it had reviewed several calculations from Hymans Robertson in which transferred-in service was specifically excluded from the lump sum calculation. The Trustee stated that the majority of the transfers took place between 2003 and 2005, with one transfer in 2006

2 CAS-82337-Q7V9 and another one in 2007. The Trustee further explained that including transferred-in service in the lump sum calculation would have been more straightforward than excluding it and the fact that it was excluded suggested that a conscious approach had been taken in applying the calculation across multiple members. Therefore, the Trustee concluded that, transferred-in service was excluded from lump sum calculations and would only increase a member’s annual pension.

XPS Administration (XPS) later replaced Hymans Robertson and became the new administrator of the Scheme.

On 17 June 2021, XPS issued a retirement quotation to Mrs N which showed an annual pension of £6,709 and a lump sum of £6,806 (the 2021 Retirement Quotation). These figures were based on her receiving payment at her NRD.

On 21 June 2021, Mrs N contacted XPS to query why the lump sum figure shown in the 2021 Retirement Quotation was lower than the one presented in the 2012 Retirement Quotation.

The following day, XPS responded to Mrs N confirming that the 2012 Retirement Quotation was incorrect and overstated her lump sum entitlement. It explained that the error in that quotation stemmed from Mrs N’s transferred-in service from both the 2003 Transfer and the 2004 Transfer being used in the calculation of her lump sum with increases being applied between the date of her leaving pensionable service and the date of the quotation. XPS emphasised that Mrs N’s transferred-in service from both transfers could only be used in the calculation of her annual pension and should not have been included in the calculation of her lump sum. XPS clarified that based on the data it held in relation to her service, the figure of £6,806 presented in the 2021 Retirement Quotation correctly reflected her lump sum entitlement in the Scheme.

On 12 July 2021, Mrs N raised a complaint with the Trustee under the Scheme’s Internal Dispute Resolution Procedure (IDRP). She said that at the time of the 2003 Transfer and the 2004 Transfer she had not been informed that the service she was transferring into the Scheme would be excluded from her lump sum calculations. Mrs N cited the Scheme Rules and other contemporaneous correspondence she had received during the two transfers to highlight that this information was not provided to her at the time. Mrs N also complained that in 2012, Hymans Robertson, the former administrator, had provided her with an incorrect retirement quotation which overstated her lump sum entitlement in the Scheme. She asked the Trustee to honour the lump sum figure presented in the 2012 Retirement Quotation.

On 11 August 2021, the Trustee issued its Stage One IDRP response. It expressed regret that the 2012 Retirement Quotation was incorrect but confirmed that the 2021 Retirement Quotation accurately reflected Mrs N’s lump sum entitlement in the Scheme. The Trustee explained that under the Scheme Rules when a member had transferred-in service, this service would be calculated in accordance with the advice provided by the Scheme Actuary. It said that as a result of Mrs N’s transfers from

3 CAS-82337-Q7V9 2003 and 2004 she secured additional service in the Scheme and in line with the advice provided by the actuary, this service would count towards the calculation for her annual pension but not her lump sum. It noted that Hymans Robertson had provided Mrs N with the 2009 Retirement Quotation which showed a lump sum of £5,428, so upon receipt of the 2012 Retirement Quotation she ought to have known that an error had occurred.

On 12 August 2021, Mrs N asked the Trustee to consider her complaint under Stage Two of the IDRP. She said that the Scheme Rules did not explicitly state that transferred-in service would only be factored into the calculation of her annual pension and not her lump sum. Mrs N mentioned that she was not informed of this at the time of the 2003 Transfer or the 2004 Transfer. She stated that if she had known at the time of the transfers that the additional service would not count towards her lump sum, she would not have proceeded with the transfers. Mrs N also noted that she had not been provided with a copy of the actuarial advice the Trustee had received at the time of the two transfers that explained the approach it had taken with regards to calculating her lump sum.

On 8 November 2021, the Trustee issued its Stage Two IDRP response. It accepted that the correspondence Mrs N received at the time of the 2003 Transfer, and the 2004 Transfer did not make it clear that the transferred-in service would only be factored into the calculation of her annual pension and not her lump sum. However, the Trustee emphasised that it must pay benefits to members strictly in accordance with the Scheme Rules and this remained the case even when incorrect or unclear information was provided. The Trustee mentioned that if Mrs N was interested, she had the option of exchanging a maximum of 25% of her annual pension for a higher lump sum.

Adjudicator’s Opinion

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The Adjudicator asked the Trustee to comment on the additional points Mrs N had made. The Trustee stated that:

• It had no record of the enquiry Mrs N raised about the 2009 Retirement Quotation. The only enquiry there was a record of was an unrelated conversation from 2004 regarding the two transfers.

• To support its position that transferred-in service was excluded from the calculation of a member’s lump sum, it was submitting the 2017 Internal Dialogue. This internal exchange related to a different member and resulted in it conducting a review of its calculation method. During this review, the Trustee determined that transferred-in service would not increase a member’s lump sum and that this approach had been applied consistently across members.

Subsequently, the complaint was passed to me to consider. I have reviewed the further comments made by Mrs N and the Trustee. However, I essentially agree with the Adjudicator’s Opinion.

Ombudsman’s decision Mrs N’s complaint centres on the fact that the service she transferred into the Scheme in 2003 and 2004, has only been included in the calculation of her annual pension and not her lump sum by the Trustee. She says she was given incomplete

6 CAS-82337-Q7V9 information at the time of both transfers and would not have proceeded with either transfer had she known how her transferred-in service would be treated.

The Adjudicator has already addressed in detail the core issue of how Mrs N’s transferred-in service has been treated. I have reviewed the Scheme Rules and other evidence provided including uncontradicted statements made by the Trustee in the IDRP responses and the 2017 Internal Dialogue and my findings are set out below.

The Scheme Rules (Rule 4.3 of Part 1 of the Scheme Rules) applicable at the time of the 2003 Transfer and the 2004 Transfer stipulated that when a transfer-in was accepted into the Scheme, in consideration of the transfer, such benefits “…as the Trustee decides on the advice of the Actuary are appropriate” will be provided. Therefore, the form of benefits to be provided was not restrictive on condition that the benefits were as the Trustee determined was appropriate on the advice of the actuary.

The Trustee states that its records show that, in accordance with this Rule 4.3 (and in line with the relevant actuarial advice at the time), in consideration of the transfers Mrs N was credited with additional pensionable service for the calculation of her ‘Scale Pension’ but not for the purpose of the calculation of her ‘Scale Lump Sum’. The Trustee states that this is how benefits were determined in respect of all transfers.

Having reviewed the 2017 Internal Dialogue and despite the transfer statements in 2003 and 2004 not being specific (see paragraphs 8 and 9 above), I find that the pensionable service credit granted in respect of the 2003 Transfer and the 2004 Transfer was determined on the basis that it would apply only in the calculation of an annual pension (Scale Pension) and not the pre-commutation lump sum (Scale Lump Sum) and that Mrs N’s Scale Lump Sum should therefore be calculated disregarding the additional pensionable service credits granted in respect of the 2003 Transfer and the 2004 Transfer.

I also find that nothing in the correspondence relating to the 2003 Transfer or the 2004 Transfer stated that the pensionable service credit offered in respect of the relevant CETV would apply in the calculation of the lump sum as well as pension. There is nothing specific and I cannot find a clear statement on which Mrs N would have been expected to rely in making her decision to transfer that the pensionable service credit would count for the calculation of her lump sum rather than only in the calculation of her pension. I therefore cannot find that Mrs N reasonably relied on any such clear statement (as there wasn’t one) when making her decision to effect such transfers.

I find that the 2009 Statement issued shortly after Mrs N left pensionable service was correct in respect of her benefits and was calculated on the basis that the pensionable service credited in respect of the transfers was not included in the calculation of her Scale Lump Sum. The error Mrs N has noted in the 2009 Retirement Quotation relates to her employment status, not to the calculation of her

7 CAS-82337-Q7V9 transferred-in service or retirement benefits so I do not consider it relevant to her complaint.

I find that the 2012 Retirement Quotation was incorrect. However, provision of an incorrect pension statement or quotation does not give a member a right to that level of benefits.

Entitlement to compensation (to put the member in the position they would have been in had the incorrect information not been provided) may arise but only if the member was reasonably expected to rely on the incorrect information for some purpose and did reasonably rely on it for that purpose.

Mrs N maintains that she relied on the 2012 Retirement Quotation to plan her retirement and that this reliance led her not to make additional contributions into the Scheme. While I acknowledge Mrs N’s assertion, the question is whether the reliance was reasonable, and whether it led to actual financial loss. I have not seen any evidence that Mrs N entered into financial commitments directly based on the incorrect lump sum figure shown in the 2012 Retirement Quotation. A decision not to make additional contributions is not sufficient for me to find that Mrs N reasonably suffered a financial loss or incurred liabilities or expenditure in reasonable reliance on the 2012 Retirement Quotation because the Quotation was not provided to her to enable her to decide what further pension contributions to make and a decision not to make pension contributions is not a financial loss. Moreover, the lump sum figure shown in the 2012 Retirement Quotation was more than three times higher than the figure quoted in the 2009 Retirement Quotation. Such a glaring discrepancy would have prompted any reasonable person to question the accuracy of the 2012 Retirement Quotation and yet there is no evidence that Mrs N made any enquiry at the time. I therefore find any reliance without enquiry was not reasonable.

While I appreciate that Mrs N believes she would have made additional contributions had she known her correct lump sum position, I find her claim to be based more on hindsight rather than a quantifiable financial loss she has actually suffered. For these reasons, I find that financial loss has not been demonstrated in this case.

However, I agree with the Adjudicator that Mrs N has experienced non-financial injustice because the information in relation to her 2003 Transfer and 2004 Transfer failed to make clear that the pensionable service credit would only apply to the calculation of her pension and because the 2012 Retirement Quotation led her to expect a higher lump sum than she was in fact entitled to. Accordingly, the Trustee should pay Mrs N £500 to remedy the significant distress and inconvenience resulting from its provision of an incorrect quotation in 2012.

Consequently, Mrs N’s complaint is partly upheld.

8 CAS-82337-Q7V9 Directions Within 21 days of the date of this Determination, the Trustee shall pay Mrs N £500 in recognition of the significant distress and inconvenience she has experienced.

Camilla Barry

Deputy Pensions Ombudsman 16 January 2026

Appendix Schedule 2 of the Trust Deed and Rules dated 21 December 2001

9 CAS-82337-Q7V9 “The Trustees may with the consent of the Principal Employer receive a transfer payment to Pension 2000 in respect of any person in accordance with the following:

The Trustees may accept a transfer payment from another exempt approved retirement benefit scheme (including for this purpose any arrangement from which transfers are permitted by the Board of Inland Revenue).

Any transfer under this Rule will be on such terms (and on the advice of the Actuary as to the benefits to be provided) as the Trustees decide. The terms of any transfer must not affect Approval and should comply with the Preservation Requirements. If such transfer is received the Trustees may, subject to the consent of the Principal Employer: -

(i) admit any person to whom the transfer relates on special terms; and

(ii) grant special benefits (consistent with Approval) having regard to the advice of the Actuary for and in respect of the Member…”

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