Eq Life scheme trustees guilty of ignoring GAR
UK - Pensions ombudsman David Laverick has found the trustees of an Equitable Life AVC scheme guilty of maladministration after failing to identify its guaranteed annuity rate.
Laverick ruled in favour of Andrew Clarke who claimed he had suffered financial loss to his pension due, principally, to Kerry Retirement Benefits Scheme trustees’ ignorance of the GAR.
Clarke said that by the time the existence of the GAR was discovered, there was insufficient time to exercise it before Equitable Life reduced the value of the AVC fund.
The trustees were ordered to pay Clarke increased pension payments of £655.44 per annum retrospectively from his January 1, 2001 retirement date.
In his determination, Laverick said: “It is well-settled law that an incoming trustee is under a duty to acquaint himself with the nature and particular circumstances of the trust property. An important feature of the investment of AVCs with Equitable Life was the existence of a GAR. The GAR was part of the nature and circumstances of the trust property, and the trustees should have known of it.
“The fact the trustees did not know of the existence of the GAR amounted to maladministration.”
The trustees claimed their ignorance of the GAR was due to their long-standing policy of not permitting members to take annuities from insurers.
But Laverick rejected their argument. He added: “In my view, the trustees’ policy was based on flawed or incomplete information and does not provide any justification for the trustees’ ignorance of the GAR.”
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