What would some examples look like?
We will now look at some scenarios to help you understand how trustees come to their decisions.
Many families have complicated relationships and sometimes beneficiaries don’t understand why they aren’t automatically entitled to the scheme benefits.
SCENARIO 1
SITUATION:
- a member dies who is in the process of a divorce.
- The decree absolute has not yet been issued but a financial settlement has been reached.
- There is no expression of wish form but the member’s will leaves the estate to the children.
OUTCOME:
- The scheme rules state that if there is no expression of wish form but a legal spouse exists, the spouse gets the lump sum death benefit.
- The trustees pay the money to the spouse.
DISAGREEMENT:
- The children make a complaint.
Do you agree with the trustees’ decision?
Let’s see what the Pensions Ombudsman said.
SCENARIO 1 – PENSIONS OMBUDSMAN
DECISION:
- The Pensions Ombudsman found that the trustees acted correctly even though the outcome was not what the member wanted.
- Money could only be paid in accordance with the rules and these were clear if no expression of wish existed.
- There was no decree absolute so there was a legal widow.
SCENARIO 2
SITUATION:
- A member dies leaving a will which states that his fiancée should inherit his house but that everything else should go to his daughter.
- An expression of wish form also exists, dated 3 months after the will, saying that the lump sum death benefit should go to his fiancée who was financially dependent on him.
OUTCOME:
- The trustees considered the documents and that the fiancée would inherit the house
- They also took legal advice and decided that the will was clear and took precedence.
- The trustees pay the money to the daughter.
DISAGREEMENT:
- The fiancée makes a complaint.
Do you agree with the trustees’ decision?
Let’s see what the Pensions Ombudsman said.
SCENARIO 2 – PENSIONS OMBUDSMAN
DECISION:
- The Pensions Ombudsman found that the will was clear and an expression of wish form is not legally binding.
- Whichever way the trustees had decided the decision was not perverse.
SCENARIO 3
SITUATION:
- A member dies leaving an expression of wish form stating that the lump sum death benefit should go to his daughters.
- The form was dated some time ago and he had since remarried
OUTCOME:
- The trustees pay the money to the daughters.
DISAGREEMENT:
- The member’s widow makes a complaint.
TRUSTEES’ RESPONSE:
- The trustees responded that as the widow received the spouse’s pension and the member’s estate would pass to her, the member might have wanted the lump sum to be paid to his daughters.
- The trustees also believed that it would be an invasion of personal privacy to investigate the financial situation and the extent of the dependency of any potential beneficiaries.
Do you agree with the trustees’ decision?
Let’s see what the Pensions Ombudsman said.
SCENARIO 3 – PENSIONS OMBUDSMAN
DECISION:
- The Pensions Ombudsman found that it was wrong of the trustees to try and guess what the member would have wanted and they did not agree that investigating financial circumstances was an invasion of privacy.
