Not upheld: unclear website information and misleading guidance on pension withdrawal options complaint against Scottish Equitable Plc (Aegon)

Decision detail

Summary

Mr C withdrew £60,000 from his Aegon pension online in October 2024, intending to take his 25% tax-free entitlement. However, he selected the 'Cash Lump Sum' option rather than the 'Flexible Regular Income' option, resulting in only £15,150 (25% of the withdrawal amount) being tax-free, with £18,830.70 in tax deducted from the remaining £44,850. This pushed Mr C into a higher tax bracket, causing an additional £1,400 capital gains tax charge on a subsequent property sale. Mr C complained that Aegon's website was misleading and failed to clearly indicate that tax-free withdrawals could only be made by phone. The investigator initially upheld the complaint but changed her view after Aegon's response, finding that the firm provided clear warnings. The ombudsman agreed with the investigator's amended findings, determining that while the website could have been clearer, Aegon provided sufficient information and that Mr C should have sought clarification before proceeding given the potential tax consequences.

The Ombudsman's reasoning

The ombudsman found that while Aegon's website could have been clearer, it provided sufficient information and clear warnings for Mr C to make an informed decision. The key warning in 'Question 3' explicitly stated 'Are you aware that you will pay tax on any money you withdraw from your pension savings' (emphasis on 'money you withdraw'), which should have made clear that tax would apply to the payment being made. The ombudsman determined that given the potential tax consequences, if Mr C perceived any ambiguity in the warnings, he should have sought clarification from Aegon before proceeding. While acknowledging Mr C's difficulty reaching Aegon by phone, the ombudsman noted that Mr C could have persisted, left a message, or contacted Aegon via chat or email. The ombudsman concluded it would not be fair to hold Aegon responsible if Mr C proceeded without clarifying any perceived ambiguity.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website