Wise v Sun Life Assurance Company of Canada (UK) Ltd

Loss of a guaranteed annuity right following the replacement of an insurance-backed pension arrangement must be attributed to the person or persons who effected the relevant change. An insurer is not responsible for maladministration merely because it provided the original policies, where the evidence shows that the employer or scheme trustees terminated those policies on professional advice. The court may determine an appeal from the Pensions Ombudsman by way of rehearing where the parties agree, including reconsideration of primary facts on additional evidence. A jurisdictional issue which is unnecessary to the result should be left undecided.

Mr Wise appealed against a determination of the Deputy Pensions Ombudsman rejecting his complaint against Sun Life Assurance Company of Canada (UK) Ltd concerning the loss of a guaranteed annuity right under policies originally issued by Confederation Life Insurance Co UK Ltd. Permission to appeal was granted only in relation to Sun Life. The parties agreed that the appeal should proceed by way of rehearing, with further evidence admitted.

The central issue was whether the policies and their guaranteed annuity right had been terminated by Confederation Life or by Convex and/or the trustees of the relevant pension scheme, acting on advice from Hogg Robinson. Sun Life also disputed the Pensions Ombudsman’s jurisdiction, but that issue arose only if the appeal succeeded.

1. The appeal was dismissed. The court accepted that the loss of the guaranteed annuity right resulted from termination of the original policies when the Old Convex Scheme was replaced by the New Convex Scheme.

2. The contemporaneous documents were given substantially greater weight than recollections made more than 25 years after the events. The evidence showed that the decision to terminate the policies must have been taken by Convex and/or the Convex Trustees, acting on advice from Hogg Robinson. There was no evidence that Confederation Life had power unilaterally to terminate the policies. Such a power was inherently improbable, as was any rational reason for Confederation Life to exercise it.

3. Accordingly, Confederation Life was not responsible for the loss of the guaranteed annuity right. Even if the loss involved maladministration, it was not maladministration by Confederation Life and therefore could not sustain the complaint against Sun Life as its successor.

4. The court added, obiter, that the decision to adopt the new arrangement was reasonable when viewed without hindsight. The arrangement was motivated by high upfront fees, while market annuity rates were then relatively high and had been so for many years. The later decline in annuity rates made the guaranteed annuity right more valuable in retrospect, but that did not establish that the decision was unreasonable when made.

5. The court declined to decide whether Confederation Life was a manager or administrator for the purposes of the Pensions Ombudsman’s jurisdiction under the Pension Schemes Act 1993 and the Personal and Occupational Pension Schemes (Pensions Ombudsman) Regulations 1996, since the appeal failed on the facts.

• Pensions Ombudsman: the Deputy Pensions Ombudsman rejected Mr Wise’s complaint of maladministration against Sun Life and the Hewlett-Packard Scheme on 29 July 2015.
• High Court (Chancery Division): permission to appeal was granted in relation to Sun Life only. The appeal was reheard and dismissed.