Musawi v Bevis Trustees Ltd & Anor

A pension trustee or administrator has no general duty to volunteer advice about a member’s entitlements. The duty is to take reasonable care that information actually supplied is correct. Information given after a member has made and acted upon an election cannot causally affect the consequences of that election where the election has already caused the relevant loss. A transfer right must be found in the governing scheme or policy and may be restricted by winding-up, retirement age and requirements to transfer the whole benefit. Deferred pension benefits are not pension arrears. They are adjusted in accordance with the applicable rules, including permitted indexation and actuarial enhancement.

The appellant was a member of the Bank of Credit and Commerce International Staff Pension Scheme. After the scheme entered winding-up, the trustees secured benefits through a policy with Legal and General Assurance Society Limited. On reaching normal retirement date, the appellant elected to take a tax-free lump sum and defer his residual pension.

He later sought to transfer the residual benefit and complained to the Pensions Ombudsman about the absence of advice, the refusal of a transfer, the calculation of his deferred pension and the treatment of a prospective widow’s pension. The Ombudsman rejected the complaint. The central issue was whether that decision disclosed an appealable point of law.

1. Appeal dismissed. The Pensions Ombudsman’s decision rejecting the complaint disclosed no error of law.
2. The scheme documents and the policy did not permit the appellant to take a tax-free lump sum and then transfer the remaining pension entitlement. Once the scheme entered winding-up, there was no right under it to transfer out. In any event, the scheme’s transfer right concerned the whole pension benefit and had to be exercised before normal retirement date. The policy provided more generous rights, but those rights were subject to the restrictions communicated before the appellant’s election.
3. There was no general duty on the trustees or the insurer to volunteer advice about the appellant’s entitlement. As explained in NHS Pension Agency v Beechinor [1997] PLR 95 at [12], the duty was to take reasonable care that information actually supplied was correct. The information supplied before the election was clear and accurate. Any later misinformation could not cause loss because the election had already been made and implemented.
4. The appellant was not entitled to pension arrears for the period of deferment. The rules provided for the deferred pension to receive retail price index increases and actuarial enhancement to reflect late payment. He could not claim both that enhanced pension and arrears for the same period.
5. The contingent widow’s pension could not be reassigned to increase the appellant’s lifetime benefit. The prospective entitlement could arise if he acquired a legal spouse before death, and Rule 11.4 did not permit it to be added to the member’s own entitlement.
6. The complaints concerning article 14 of the European Convention on Human Rights, clause 16.4(ii) of the Deed and guaranteed minimum pension were unsubstantiated. Bevis was entitled to exercise clause 16.4(i) and purchase the policy as the means of securing the scheme benefits.

• Pensions Ombudsman: Final decision dated 6 November 2008 rejecting the appellant’s complaint.
• High Court (Chancery Division): Appeal under section 151(4) of the Pension Schemes Act 1993 dismissed.