Not upheld: Pension transfer advice complaint against Pension Works Limited

Decision detail

Summary

Mr H complained that Pension Works Limited unsuitably advised him to transfer his defined-benefit occupational pension (£274,312) to a SIPP in January 2020. The complaint was based on the transfer being financially unviable and Mr H lacking capacity for loss. However, the ombudsman found that while the transfer required critical yields of 3.72-4.13% against a discount rate of 3.7%, Mr H had a genuine and compelling need to access the tax-free cash to purchase a property and repay a £35,000 family loan, with no alternative means available. The ombudsman concluded that Mr H would have proceeded with the transfer regardless of advice, making it suitable in the circumstances, and therefore did not uphold the complaint.

The Ombudsman's reasoning

The ombudsman found that while the transfer was not financially viable (critical yield of 3.72-4.13% against a discount rate of 3.7% with Mr H's low-medium risk profile and low capacity for loss), Mr H had a compelling and genuine need to access the tax-free cash to purchase a property and repay a family loan. The ombudsman concluded that Mr H would have wished to proceed with the transfer regardless of Pension Works' advice, as there was no alternative way to meet this objective. The discrepancy between the recorded objective (mortgage repayment) and the actual need (property purchase and loan repayment) did not change the outcome, as the actual need was sufficiently strong to outweigh the financial disadvantages of leaving the DB scheme.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website