Standard Life Private Personal Pension Plan · CAS-75912-C9B4

CAS-75912-C9B4

Ombudsman’s Determination Applicant Mr M

Scheme Standard Life Private Personal Pension Plan (the Plan)

Respondent Standard Life

Outcome

Complaint summary

Background information, including submissions from the parties On 19 and 29 January 2020, Mr M telephoned Standard Life to discuss taking his benefits from the Plan. Following this, Mr M proceeded to take full encashment of £14,000 from the Plan.

On 4 February 2020, Standard Life wrote to Mr M to confirm that the Plan had been used to provide benefits to him. It said in summary:-

• On page 1, “The amount taken as income may be less than the amount earmarked for income due to charges”.

• On page 2, “Under new Government rules, your annual limit changes when you access your pension benefits flexibly. This payment means that you’ve done that, and your annual allowance has changed”.

• On page 3, “You’ve flexibly accessed your pension. Under new government rule, your annual allowance limit changes when you access your pension rights flexibly”.

• Your annual allowance becomes £4,000 for any ‘money purchase arrangement’ when you flexibly access your benefits. This means that if you or someone else on

1 Standard Life CAS-75912-C9B4 your behalf pays more than £4,000 into those arrangements in a year, you’ll have to pay an annual allowance charge on the extra”.

On 16 June 2021, Mr M telephoned Standard Life and raised a formal complaint. He said Standard Life should have explained the reduction in the MPAA during its telephone calls with him on 19 and 29 January 2020, when discussing taking his benefits.

On 21 June 2021, Standard Life telephoned Mr M to discuss his complaint. It followed up by sending him an email detailing its response to his complaint. It said in summary:-

• As Mr M was happy to request his full encashment online, it did not discuss the MPAA with him during the telephone calls of 19 and 29 January 2021 as its online retirement journey had been designed to cover the key information and considerations in taking benefits from one’s pension plan.

• There was information available about making future contributions, and how limits may be affected in the online journey under the ‘Things to think about’ and ‘Confirmation’ section.

• The MPAA was explained to Mr M in its letter of 4 February 2020.

• It provided Mr M with sufficient warning and notification that the amount he could contribute could be reduced by proceeding with his chosen retirement option. So, it did not uphold his complaint.

Following the complaint being referred to The Pensions Ombudsman, Standard Life and Mr M made further submissions that have been summarised in paragraphs 8 to 12 below.

Standard Life’s position

It does not agree that Mr M was not sufficiently warned about the impact of taking his benefits. It wrote to Mr M explaining the annual allowance changes when benefits are accessed flexibly and covered this information again when Mr M completed the online journey which included adequate warnings about MPAA.

It believes it was reasonable for it to reject Mr M’s complaint.

Mr M’s position

Standard Life was complicit in not advising him that by accepting the full amount of £14,000 instead of £10,000 would render his annual allowance of £40,000.00 void.

He cannot understand how Standard Life does not understand its poor guidance has caused detriment in his ability to make tax free contributions.

If the MPAA charges were explained properly, he would have only withdrawn £10,000 from the Plan. 2 CAS-75912-C9B4 Adjudicator’s Opinion

On the Key Considerations page of the online journey, Mr M was asked, “Are you planning to continue contributing to this or any other pension”. As Mr M was planning to do so, he would have clicked yes, where a warning was then provided. This warning read, “Excellent. But did you know that your contributions allowance may drop? When taking more than your tax free cash, the maximum that you or an employer can pay into any of your defined contribution pensions, without attracting a tax charge, will reduce to £4,000 a year with no carry forward. […] If this allowance is exceeded, a tax charge of up to 46% pay apply so check this allowance isn’t going to be a problem going ahead…”.

Through the journey, Mr M would have also had sight of warnings on the Understand Page and then the Confirmation page which said, “In future you may be more restricted in how much you or an employer can pay into this or any other pension you may have to tell other Pension Providers. When you take more than the tax free cash, the maximum that you or an employer can pay into any of your defined contribution pensions without attracting a tax charge will reduce to £4,000 a year. […] Check this limit isn’t going to be a problem before going ahead. Once the limit reduces you can’t change your mind later”.

The Adjudicator understood that Mr M expected Standard Life to have mentioned the MPAA during its telephone calls, however, as Mr M said he wanted to take full encashment of his benefits he was directed to do so using the online journey, so it was reasonable for Standard Life not to mention the MPAA during the telephone calls.

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Ombudsman’s decision

I do not uphold Mr M’s complaint and no further action is required from Standard Life.

Anthony Arter CBE

Deputy Pensions Ombudsman

29 October 2024

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