Ombudsman clears Standard Life after client LTA breach

James Phillips reports...

Standard Life has been cleared of misleading a client about the value of his pension pot by the Pensions Ombudsman who said the retiree should have taken advice to avoid breaching the lifetime allowance rather than rely on figures provided by the insurer.

The complainant, Mr E, had a number of pension pots, including a defined contribution (DC) plan with the insurer, as well as two separate self-invested personal pensions (SIPP).

Mr E claimed Standard Life had told him his guaranteed minimum pension (GMP) was included in the value of his pension pot. This led him to believe he had not reached the lifetime allowance, so he made additional contributions into his SIPPs.

However, Mr E had reached the cap and was hit by a large tax bill when putting one of his SIPPs into drawdown.

Yet, an adjudicator for the PO rejected Mr E’s claim, stating that it was his “own misunderstanding of the statements” that led to him exceeding the cap, and it was “not reasonable to assume that the final plan value included the GMP”.

They also said Mr E did not seek independent financial advice, which may have clarified Standard Life’s statements.

Mr E appealed against the adjudicator’s ruling, but deputy ombudsman Karen Johnston again dismissed the complaint, saying she was “not persuaded the ‘final plan value’ provided in the retirement benefit illustrations were misleading”.

In her judgement, she wrote: “I find that on the balance of probabilities he acted in reliance on his own interpretation of what final plan value meant and how it could be used when he invested additional monies into the SIPPs. Ultimately this led him to exceed the lifetime allowance and pay the tax liability for doing so.

“On the facts, I see no basis to hold Standard Life responsible for Mr E’s misunderstanding. Therefore, I do not uphold the complaint.”

Standard Life was unavailable for comment at the time of publication.