Not upheld: pension transfer restriction - illiquid fund complaint against Prudential Assurance Company Limited

Decision detail

Summary

Mr M complained that Prudential would not allow him to transfer his Retirement Account pension to another provider because it contained an illiquid Woodford Equity fund investment representing 1% of the fund value. Mr M requested either an in-specie transfer or for Prudential to buy out the suspended fund, but Prudential refused both options. The ombudsman found the complaint not upheld, determining that HMRC rules prohibit partial transfers of crystallised SIPPs in drawdown and that in-specie transfers are not a feature of the Retirement Account product. The ombudsman concluded that Prudential's position was constrained by regulatory requirements and practical considerations beyond its control.

The Ombudsman's reasoning

The ombudsman found that Prudential's position was constrained by HMRC rules which do not permit partial transfers of crystallised SIPPs in drawdown - the entire fund must transfer in a single tranche. In-specie transfers are not a feature of the Retirement Account product, and the ombudsman noted that such transfers are costly, not always economically viable, and not accepted by all SIPP providers. The Woodford fund's status as an active, income-generating asset presented challenges to alternative disposal routes. The ombudsman concluded that Prudential did not advise Mr M to purchase Woodford and therefore was not at fault for his position.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website