Scottish Equitable Plc trading as Aegon · DRN-6205968

The complaint Mrs A complains that Scottish Equitable Plc trading as Aegon (Aegon) incorrectly deducted tax from an ad hoc income withdrawal from her pension. And that it provided a poor service when she tried to understand what’d happened. What happened Mrs A has a drawdown plan with Aegon on its One Retirement Platform. On 9 April 2025, she requested a withdrawal of £500 through Aegon’s online portal. She had a tax code of 60L. And as her withdrawal request was made near the start of the financial year, she felt it would be paid without tax. Aegon sent Mrs A an email on 9 April 2025 to confirm it’d received her request. It then processed the payment on 10 April 2025. Aegon emailed Mrs A on 10 April 2025 to confirm that it’d completed the withdrawal. It said it’d deducted tax of £89.80, so the net amount paid to Mrs A was £410.20. The email stated: “If you have any questions on the tax deducted, please contact HMRC on [number] or visit their website at [web address]” Mrs A called Aegon on 2 May 2025 as she wanted clarity about the tax deducted. Aegon said that when it processes a payment, it uses the tax code provided by HMRC. Mrs A said that both she and HMRC felt that she shouldn’t have been taxed. She asked Aegon to investigate this, as she expected to receive the full £500 she’d withdrawn. Aegon emailed Mrs A on 7 May 2025. It said it didn’t calculate tax deductions itself. Instead, any deductions at source were based on the tax code provided by HMRC. It also sent Mrs A her transaction history. It explained what her cumulative tax code meant. And directed Mrs A to HMRC for further information on tax, or to reclaim tax. Unhappy with the tax deduction, Mrs A complained to Aegon on 18 May 2025. She felt it’d been Aegon’s choice to deduct £89.80. She asked it how it’d calculated the £89.80. She also felt she’d received poor service when she’d queried the tax deducted. Aegon called Mrs A on 20 May 2025. It told her it wasn’t involved with the taxation of the withdrawal. It said that if there was a tax code on file, it would use that when processing payment. Mrs A said while HMRC had confirmed the 60L tax code Aegon held, it felt the £500 withdrawal should’ve been tax free. She wanted Aegon to pay her the tax back. Aegon said it couldn’t do that. But would investigate and provide a response. It reconfirmed that it would only deduct tax based on the tax code that HMRC provided. Aegon issued its final response to the complaint on 30 May 2025. It didn’t think it’d done anything wrong. It acknowledged that Mrs A hadn’t expected to pay tax on her £500 gross withdrawal, given she had a tax code of 60L. But said that HMRC still required it to deduct tax from her withdrawal. It said it’d paid tax based on the tax code HMRC provided. And that it wasn’t made aware of how much of her personal allowance Mrs A had used. It said HMRC didn’t provide it with that information.

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Aegon said that HMRC only provided it with the tax code to be applied, which was cumulative, based on the full tax year. It said it couldn’t assume that no other withdrawals had been taken and that the payment it would make should be tax free. It said that if Mrs A had overpaid tax, she’d have to claim that back from HMRC. It provided information about how she could do this. Aegon acknowledged Mrs A was unhappy with the service she’d received when querying the tax paid. But, having reviewed the evidence, it didn’t consider it’d provided poor service or incorrect information when assisting her with her tax query. It said that during the complaint call on 2 May 2025, its customer service representative had explained that Aegon wasn’t involved with the calculation of tax. Instead, it processed tax based on the tax code HMRC had provided. It also noted that its administration team had emailed its findings to Mrs A on 7 May 2025, within the service standard the customer service representative had provided. Aegon said its administration team had confirmed that Aegon didn’t calculate the tax deductions itself. It said that any deductions were done at source based on the tax code HMRC had provided. Mrs A didn’t agree with Aegon. She repeated her complaint to it on 8 August 2025. She also brought her complaint to this service the same day. She felt she’d only paid tax because Aegon had made a miscalculation. As such, it was its responsibility to put things right. She felt the £89.80 deducted had nothing to do with HMRC. She also wanted Aegon to explain its tax calculation. Mrs A noted that Aegon had said it didn’t know whether she’d already taken a cash lump sum from elsewhere. She felt this was irrelevant and none of Aegon’s business. She also felt that all Aegon had to do was ask her about any other withdrawals. She felt Aegon hadn’t taken this step because it didn’t think her payment instruction justified such effort. Mrs A said that Aegon’s actions had caused her worry and exhausted her mentally. And required her to make considerable efforts to get the incorrectly deducted tax back. She also explained that she’d needed the full £500 she’d requested as she’d promised it as a gift to a family member. To put things right, she wanted £500 compensation for the time taken and the suffering she’d experienced. Mrs A also said that Aegon’s final response letter hadn’t covered all her complaint points. She wanted Aegon to confirm in writing its claim that HMRC had provided a specific instruction to deduct the tax. And to explain how it’d calculated the £89.80 deduction. Mrs A wrote to Aegon again on 27 August 2025 to further her complaint. She said she’d had previous difficulties with Aegon’s tax deductions. And that they’d taken a year or more to resolve with HMRC. She maintained that she would’ve provided clarity about any other income if Aegon had asked her. Aegon provided evidence of the tax code it held for Mrs A. This was 60L cumulative. It acknowledged that Mrs A felt that because her tax code was 60L, her requested withdrawal – which was under that amount - wouldn’t be taxed. But it said that wasn’t how it worked. It said it had no knowledge of Mrs A’s income from other sources, only HMRC would have that information. Therefore, and in line with HMRC rules, its system automatically deducts tax based on the cumulative amounts taken and the tax code it holds. It said that after a tax year ends, HMRC would reconcile Mrs A’s tax position. And would make a repayment directly to her, or adjust her tax code to allow for correction, as appropriate. Aegon also said that Mrs A could claim any overpaid tax back from HMRC. Aegon said it hadn’t made an error. It said it had acted in line with its process, and with HMRC taxation rules.

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Mrs A told this service that when she’d requested the £500 withdrawal through Aegon’s portal, she’d checked but couldn’t see any information about tax being taken. She said HMRC had then told her that she shouldn’t have been taxed. Mrs A said she had now received a tax refund. Aegon told this service that it’d made Mrs A aware that her withdrawal would be taxed. It said the online journey she’d completed on 9 April 2025 had confirmed twice that tax would be deducted. It said that Mrs A had to tick to agree she’d understood the declaration. Aegon provided this service with its online guide for ad hoc requests. This showed what Mrs A would’ve seen when she submitted her request. It said that within the “Taxation and sustainability” section of the request it’d warned Mrs A that she should consider tax implications. And confirmed that tax would be deducted at the appropriate rate. It also said that the declaration section included a list of warnings. And that one of these specifically stated: “I am aware that Aegon will deduct income tax at the appropriate rate before making payment”. It said Mrs A had ticked the box to agree she understood this and then submitted her request. It therefore felt that she was made aware her payment would be taxed. Aegon said it would’ve expected Mrs A to query that with it before submission if she had any concerns over the request being taxed. Our investigator didn’t think Aegon had done anything wrong. While he acknowledged that Mrs A hadn’t expected to be taxed on her withdrawal, he felt that Aegon had correctly processed it on 9 April 2025. He said it had reasonably relied on the tax code provided by HMRC. And that as that was a cumulative tax code, Aegon had to tax the withdrawal. He explained what a cumulative tax code meant. Our investigator said that when Mrs A had requested the withdrawal through the online portal, she’d been taken through a process which had provided the following advice: Taxation and income sustainability considerations Please fully consider if the income level selected creates - any tax implications - potential for running out of money. Please be aware that we’ll deduct income tax at the appropriate rate before making payment, at the correct rate determined by HMRC. And that after that, Mrs A had been taken to the declaration page. At this point, she’d had to agree to the following – amongst other things - before any payment could be made: I am aware that Aegon will deduct income tax at the appropriate rate before making payment. The appropriate rate of income tax Aegon is required to deduct is determined by HMRC. Our investigator was therefore satisfied that Mrs A should’ve been aware that tax could be taken from the withdrawal. He said if she felt this wasn’t correct, he would’ve expected her to contact Aegon before agreeing to the withdrawal. Our investigator also agreed with Aegon that it had no power to change Mrs A’s tax code. He said this was determined and issued solely by HMRC. He also felt that Aegon would’ve no knowledge of what income Mrs A had already taken out elsewhere. He said that Aegon had no control over the tax it was required by HMRC to deduct.

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Our investigator considered the service Aegon had provided to Mrs A when she’d queried the tax deduction. He said that during the initial complaint call on 2 May 2025, Aegon had explained that it didn’t control what payments did and didn’t get taxed. Instead, it was required to use the tax code provided by HMRC. He said this was correct information. And that the evidence showed that Aegon had then done what it said it would do when it had further investigated and sent a follow up response to Mrs A on 7 May 2025. He said this had reconfirmed that Aegon itself didn’t calculate tax deductions. He didn’t think Aegon had done anything wrong. Mrs A still felt that Aegon hadn’t deducted tax at the appropriate rate determined by HMRC. And that her first £600 of income should’ve been tax free. She felt it’d wrongly deducted £89.80. And that the error was nothing to do with HMRC. She said HMRC had told her to challenge the deduction. Mrs A said Aegon shouldn’t have assumed that she had other taxable income. She said there was no other taxable income. Mrs A said she had carefully studied the "Taxation and income sustainability considerations" section and the declaration during her online withdrawal application. She said done so because Aegon had twice before overtaxed her withdrawals. She didn’t think Aegon had honoured her declaration. She still felt Aegon had made up its own way of income tax deduction. Our investigator repeated the point that Aegon didn’t have any control over what must be taxed. He said its administration team had confirmed that it doesn’t calculate tax deductions. Instead, any deductions are done at source based on the tax code provided by HMRC. He also said that although the withdrawal was taken near the start of the tax year, Aegon wouldn’t know whether Mrs A had any other income. He said it could only work with what HMRC had provided. He said there was no evidence that Aegon had made up the process of tax deduction, as it was governed by HMRC. He was satisfied that Aegon had correctly followed the process. And that Mrs A should therefore direct any complaint about why she was taxed to HMRC. Mrs A didn’t think it was fair for our investigator to have directed her back to HMRC. She repeated her point that HMRC had already told her that her withdrawal shouldn’t have been taxed. And that it had referred her back to Aegon. She said Aegon had yet to fully explain its actions. Mrs A said she didn’t have any other taxable income. She felt HMRC would’ve known and that it would’ve advised Aegon about it if she’d had any. She also felt that Aegon could’ve asked her to declare any other taxable income as part of its process. As agreement couldn’t be reached, the complaint has come to me for a review. What I’ve decided – and why I’ve considered all the available evidence and arguments to decide what’s fair and reasonable in the circumstances of this complaint. Having done so, I’m not going to uphold it. I agree with our investigator that there’s no evidence that Aegon has done anything wrong. I know this will be disappointing for Mrs A. I’ll explain the reasons for my decision. I hope it’s helpful if I explain our role. We provide an informal dispute resolution service and we have no regulatory or disciplinary role. That means we can’t tell a business how to

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operate and we can’t punish a business, or tell it to change its processes. If we find that something has gone wrong, we consider how to put things right, on a fair and reasonable basis. I acknowledge that Mrs A is unhappy with the tax Aegon deducted from her withdrawal. But unless I find evidence that Aegon has acted incorrectly, or treated Mrs A unfairly, I can’t reasonably uphold the complaint. I first considered the information Aegon provided to Mrs A. And whether this clearly explained how her withdrawals would be taxed. Information provided When Mrs A used the online portal for her withdrawal request, Aegon explained that the request could have tax implications. I’ve included the wording that it presented to Mrs A during her request earlier in my decision. I’m therefore satisfied that Aegon clearly explained that the requested withdrawal could lead to the payment of income tax. And that the rate of that tax would be determined by HMRC. I can also see that Aegon separately explained how it would take tax within its Key Features documentation. I appreciate that Mrs A feels that her withdrawal request was only taxed because Aegon made a miscalculation. And that the £89.80 deducted had nothing to do with HMRC. I understand that HMRC told Mrs A that she shouldn’t have been taxed. I have no way of knowing why HMRC told Mrs A this. But I agree with our investigator that Mrs A can still direct any complaint about why she was taxed to HMRC. I acknowledge that Mrs A said she’d had previous difficulties with Aegon’s tax deductions, which had taken a long time and a lot of effort to resolve with HMRC. So I can understand why, when she’d made her £500 withdrawal request, she’d looked to see if there was any information about tax. However, I can’t reasonably agree with Mrs A that Aegon didn’t honour her declaration, or that it failed to provide any information about how the withdrawal would be taxed. And while I note that Mrs A doesn’t feel that Aegon deducted tax at the appropriate rate HMRC determined, I can’t fairly agree. I say this because I’ve not seen any evidence that Aegon acted incorrectly when it made the deduction I’m satisfied HMRC required it to make. I appreciate that Mrs A said that HMRC told her she should challenge Aegon about the deduction. But I’m not persuaded that was fair. I’m pleased to see that she has now received a refund through HMRC. And while I’m sorry that this took effort and time to arrange, I can’t fairly hold Aegon responsible for that. I say this because – as Aegon has explained more than once – it doesn’t determine the tax that must be deducted. Instead, its system automatically deducts tax based on the cumulative amounts taken and the tax code it holds. If it didn’t take tax in this way, it wouldn’t meet HMRC’s requirements. Overall, I’m satisfied that the information Aegon provided Mrs A was clear and that it explained that it would deduct income tax at the rate determined by HMRC before making payment. I went on to consider Mrs A’s complaint that Aegon had failed to fully respond to her complaint in its final response letter. Did Aegon fully respond to Mrs A’s complaint? Mrs A felt Aegon should’ve confirmed in writing that it had been HMRC which had imposed

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the tax deduction. And that it should’ve explained how it had calculated the £89.80 deduction. While I acknowledge that Mrs A doesn’t consider that Aegon has responded to these two points, I’m satisfied that it has. I say this because, when Aegon emailed Mrs A on 10 April 2025 to confirm that it’d completed the withdrawal, it explained it’d deducted tax of £89.80. And referred her to HMRC if she had questions about the amount of tax deducted. Furthermore, when Mrs A called Aegon on 2 May 2025, it explained that when it processes a payment, it uses the tax code provided by HMRC. And in its 7 May 2025 email, it explained that it didn’t calculate tax deductions itself. Instead, any deductions were based on the tax code provided by HMRC. And on 20 May 2025, Aegon again told Mrs A it wasn’t involved with the taxation of the withdrawal. And reconfirmed that it would only deduct tax based on the tax code that HMRC provided. I acknowledge that Mrs A said HMRC told her that her withdrawal shouldn’t have been taxed. And referred her back to Aegon. But I can’t reasonably agree that this is fair. I say this because Aegon has clearly explained that it has only taxed Mrs A in line with the tax code HMRC provided to it. And I’ve not seen any evidence that this isn’t correct. Therefore it wouldn’t be fair or reasonable to expect Aegon to have taken any other approach. As such, while I understand that Mrs A wants Aegon to explain its tax calculation, I’m satisfied that it has already clearly explained that it wasn’t its tax calculation. Instead, Aegon simply carried out the tax calculation HMRC had required it to. Therefore, I’m satisfied that Aegon acted reasonably when it referred Mrs A back to HMRC if she wanted further explanation. And I also consider that Aegon has responded to Mrs A’s complaint as fully as it is able to. I next considered Mrs A’s complaint that Aegon should’ve known, or tried to find out about, any other taxable income she had before it processed the tax deduction. Should Aegon have asked Mrs A about any other taxable income before processing her withdrawal request? Mrs A said she had no other taxable income. And felt HMRC would’ve advised Aegon about this. Even if that wasn’t the case, she felt Aegon could’ve asked her to declare any other taxable income as part of its process. Mrs A felt that the fact that Aegon didn’t know whether she’d already taken a cash lump sum from elsewhere was irrelevant and none of its business. But she also felt that if Aegon had tried to ask her about any other withdrawals, she would’ve provided the information it needed. Aegon noted in its final response letter that HMRC didn’t provided it with information about how much of her personal allowance Mrs A had used. And that as HMRC only provided it with the tax code it should use, it couldn’t assume that no other withdrawals had been taken and that the payment it would make should be tax free. I’m not persuaded that Aegon should’ve asked Mrs A about any other taxable income before it processed her withdrawal request. I say this because this is not Aegon’s role, it’s HMRC’s. Aegon – or any other pension provider – can’t reasonably be required to ask its customers about their other income sources for any tax year. I say this because it would have no way of checking that any information provided was correct. It can’t simply take someone’s word for it. Instead, it’s down to HMRC to request and check this sort of information.

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I’m therefore satisfied that there was no reason for Aegon to have asked Mrs A about any other taxable income before it processed her withdrawal request. I acknowledge that Mrs A feels that Aegon’s actions caused her worry and mental strain. And that after her withdrawal payment was taxed, she’d had to make considerable efforts to get the overpaid tax back. While I can see that this has been a stressful time for Mrs A, I haven’t found any evidence that Aegon did anything wrong. Therefore I can’t reasonably require it to pay Mrs A any compensation. And I can’t uphold the complaint. My final decision For the reasons explained above, I don’t uphold the complaint. Under the rules of the Financial Ombudsman Service, I’m required to ask Mrs A to accept or reject my decision before 14 April 2026. Jo Occleshaw Ombudsman

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