Sections

Trustee case reveals need for documents

UK - A recent move by the UK pensions ombudsman to rule on a dispute rather than giving the trustees a second chance highlights the need for trustees to keep records of decision-making, pensions lawyers have declared.

Arshad Khan, associate at Sacker & Partners in London, said: "The Ombudsman's recent decision to uphold a complaint against the trustee and not refer it back to the trustee to resolve - when the initial decision was deemed flawed - could have been easily avoided and is a lesson to all pension scheme trustees."

Deputy Pensions Ombudsman Charlie Gordon upheld a complaint against the trustee in a case between Jeanette Wilson and the trustee of the Adam Wilson & Sons Ltd Discretionary Pension Scheme, and decided himself what proportion should be distributed to the beneficiaries.

In his determination, Gordon said it was "unfortunate" there were no minutes of meetings or other evidence to substantiate the trustee's claim as to how it came to their decision.

"Without such a documentary record, there is no way of verifying what factors were taken into consideration when the trustee made its decision, or that the potential conflict of interest was properly dealt with," he said.

Under this specific case, the pension scheme member, Mr R Wilson, had nominated his daughter - Jeanette - and his three granddaughters as equal recipients of benefits on his death. But when he died, the trustee awarded the full death benefit to his son, Mr H Wilson, who also happened to be a director of the trustee.

He then passed on the whole amount to his daughters - who were the granddaughters in question - and Jeanette Wilson claimed that she had been overlooked.

 "This case underlines the absolute importance of documenting the decision-making
process on distribution of death benefits and in recording potential conflicts
of interest at the outset," said Khan.

"The absence of records may not only lead to a successful complaint to the ombudsman, but can also cause the ombudsman to make a direction as to the distribution of the death benefits, instead of remitting the decision back to the trustees to consider afresh," he said

If you have any comments you would like to add to this or any other story, contact Julie Henderson on + 44 (0)20 7261 4602 or email julie.henderson@ipe.com

Have your say

You must sign in to make a comment