In a recent decision (CAS-64304-R5R1), the Pension Ombudsman confirmed that the question of who inherited the deceased’s estate can be a relevant factor for scheme trustees when determining who should receive a lump sum death benefit.
Background
The deceased entered into a civil partnership with Mr T in 2006. In 2012, they applied for a decree nisi to take steps to dissolve their civil partnership. However, a decree absolute was never applied for so they remained civil partners but lived separately.
The deceased took out a Self Invested Personal Pension (SIPP) with AJ Bell in January 2019. He completed a nomination form stating that Miss E should receive 100% of the benefit should he die.
Shortly before his death, the deceased handwrote what purported to be a new will leaving £50,000 to each of his nieces, £100,000 to Ms Y, £100,000 to Ms S and the remainder to Miss E. However, the purported will was not witnessed so it had no legal effect and the deceased died intestate on 27 September 2019. As the deceased and Mr T were still civil partners, Mr T inherited the deceased’s estate under the intestacy rules.
Mr T’s claim and AJ Bell’s decision
Mr T, via his solicitors, notified AJ Bell that he intended to claim as a beneficiary of the deceased’s SIPP. Mr T provided personal details about his relationship with the deceased and set out why they had not obtained a decree absolute.
AJ Bell decided not to pay any of the SIPP benefit to Mr T, taking into account the fact that Mr T had been provided for by the deceased in another way. AJ Bell also took into account the wishes in the purported will, deciding that this superseded the nomination form even though it had not been properly witnessed and had not been addressed to the scheme trustees. The definition of ‘eligible recipient’ in the scheme rules was wide enough to include those named in the purported will.
Complaint to the Pension Ombudsman
Mr T complained to the Pension Ombudsman stating that AJ Bell had taken into account an irrelevant factor in making its decision. The Pension Ombudsman did not uphold Mr T’s complaint. They stated that AJ Bell had exercised its discretion appropriately and had only taken into account relevant factors, which can include the question of who inherited the deceased’s estate. The Pension Ombudsman also stated that AJ Bell had not made any error when taking into account the wishes in the purported will.
The questions considered in this case, namely whether who inherits the deceased’s estate is a relevant factor and whether the wishes in a will or a nomination form should be followed, are common ones. The guidance provided in this decision by the Pension Ombudsman is therefore useful to trustees considering how to exercise their discretion.
Please contact Catherine Pugsley or Hannah Fingleton in our Private Client Team on 020 7222 5381 to discuss pensions and estate planning.