It was reasonable for the trustees of a self-invested personal pension to delay making a decision on the distribution of death benefits in order to give the deceased member's adult children time to provide further information, given the circumstances of the case. These included allegations by the children of financial irregularities, including possible fraud, against the member's current partner, Mrs Barnicoat, whom he had nominated to receive the death benefits six months before he died.
The PO dismissed a complaint by Mrs Barnicoat, who was eventually awarded the member's death benefits nearly a year after his death. She submitted that the delay while the trustees looked into the children's allegations caused her financial loss and considerable distress, a situation she said was exacerbated by the trustees' decision to keep the details of the children's claims confidential.
The PO found that although the trustees could have been more proactive in checking the truth of the allegations where possible and keeping the member updated without breaching confidentiality, it had acted fairly and reasonably in the exercise of its discretion. In doing so, it had balanced the need to obtain accurate information against the “legitimate desire to protect people's confidentiality”.
The decision to dismiss the complaint is sensible in these circumstances. The full details of the allegations made by the deceased member's children are not available and so it is difficult to evaluate the pension provider's conduct in delaying the payment of death benefits pending its investigation.
This determination is a reminder that when a provider or trustee is required to exercise discretion over death benefits, this is often not straightforward. On the one hand, it is effectively required to make payment within two years so as to avoid tax charges. On the other hand, interested parties may reasonably expect the trustee to gain a thorough understanding of the underlying background, which may take some time to establish.
However, in this case the benefit payment was made well before the end of the two-year window, so the complainant's submission that it should have been made earlier was unlikely to find favour with the PO. It is therefore also unsurprising that the PO refused to reimburse her expenditure in pursuit of her complaint.