Not upheld: Other regulated complaint complaint against Legal and General Assurance Society Limited

Decision detail

Summary

Mr F complained that L&G unfairly reduced his pension income and tax-free cash between 2022 and 2023 when he deferred his defined benefit pension. He argued he would have taken his benefits in 2022 had he been better informed that values could decrease. The ombudsman found that while the annual pension increased from £10,439.88 to £11,483.76, the tax-free cash decreased due to rising gilt yields following the September 2022 mini-Budget. L&G's communication that future values 'may be different' was not misleading as it logically included the possibility of lower values. The ombudsman concluded that Mr F would likely have made the same deferral decision in 2022 regardless, as he was still working and wanted to avoid higher tax. The complaint was not upheld.

The Ombudsman's reasoning

The ombudsman found that L&G offered Mr F a higher annual pension in 2023 (£11,483.76) than in 2022 (£10,439.88), reflecting the deferral uplift. The reduction in tax-free cash was due to changes in gilt yields and financial market factors between the two quotation dates, which affected the cost of converting future pension income into upfront cash. L&G's statement that future values 'may be different' was not misleading as it logically includes the possibility of lower values. The ombudsman concluded that even with clearer messaging, Mr F would likely have made the same decision to defer in 2022 because he was still working and wanted to avoid higher tax.

How this compares

Source

Read the original decision on the Financial Ombudsman Service website