Not upheld: incorrect information about pension value, poor communication, wrongful request to return tax-free cash complaint against Scottish Widows Limited

Decision detail

Summary

Mrs D complained that SW provided incorrect information about her pension value, causing her financial loss and distress. Her pension statements showed values of £85,739-£96,694, but when she claimed her pension in November 2025, SW reduced the value to £87,872 due to unpaid premiums since March 2024. SW failed to explain that its pension was 'due-based' with values assuming all premiums would be paid and subject to adjustment at claim. Although the ombudsman found SW made errors in communication and wrongly asked Mrs D to return her tax-free cash, it concluded Mrs D was never entitled to the higher amount and that the £2,500 compensation plus interest already paid was fair and reasonable. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that Mrs D's pension was structured on a 'due-based' basis where values assumed all premiums would be paid, with adjustment at claim point for unpaid premiums. The annual statements contained disclaimers explaining this. Although SW failed to explain this mechanism to Mrs D and wrongly asked her to return her TFC, Mrs D was never entitled to the higher pension value. The ombudsman found Mrs D proceeded with early retirement despite knowing the pension value was disputed and unresolved. While SW caused loss of expectation and inconvenience, the £2,500 compensation plus interest already paid was fair and reasonable.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website