Not upheld: failure to provide required pre-retirement communications; automatic annuitisation without prior notice complaint against Scottish Widows Limited
Financial Ombudsman decision DRN-6281036 of 2026-05-05T00:00:00+00:00. failure to provide required pre-retirement communications; automatic annuitisation without prior notice complaint against Scottish Widows Limited. Outcome: Not upheld.
Decision detail
| Reference | DRN-6281036 |
|---|---|
| Decision date | 2026-05-05T00:00:00+00:00 |
| Firm | Scottish Widows Limited |
| Product | pension |
| Claim type | failure to provide required pre-retirement communications; automatic annuitisation without prior notice |
| Outcome | Not upheld |
| Remedy | Scottish Widows to pay £200 compensation for distress and inconvenience. Scottish Widows has already paid £1,336.10 in annuity payments for August-December 2025, £805.48 interest on tax-free cash held, and £21.64 interest on annuity payments held (calculated at 8% simple interest). The ombudsman drew Scottish Widows' attention to Miss H's preference regarding unwinding the annuity in case it wished to make a concession, though this was not required. |
Summary
Miss H complained that Scottish Widows automatically annuitised her pension at age 75 without providing required prior notice. Scottish Widows acknowledged a system error prevented it from sending five communications starting at age 73 that should have informed Miss H of the impending annuitisation and available options. After Miss H objected, Scottish Widows offered her three options: retain the annuity, transfer to another provider, or take full encashment. Miss H ultimately chose to take tax-free cash and set up an annuity with the remaining funds. The ombudsman found that while the failure to communicate was an error, Scottish Widows' subsequent provision of the same options Miss H would have had if properly notified, combined with £200 compensation for distress and inconvenience, fairly resolved the complaint.
The Ombudsman's reasoning
The ombudsman agreed with the investigator that while Scottish Widows failed to send required pre-75th birthday communications due to a system error, it acted correctly by subsequently providing Miss H with the same three options she would have had if proper notice had been given. Since Miss H chose to proceed with the annuity after being presented with these options, the ombudsman could not fairly require Scottish Widows to reverse the annuity. The £200 compensation was appropriate as it reflected a larger single mistake requiring reasonable effort to resolve, which falls within the FOS guidance for such scenarios.
How this compares
| Group | Decisions | Uphold rate |
|---|---|---|
| Scottish Widows Limited, all decisions | 827 | 20% |
Source
Read the original decision on the Financial Ombudsman Service website