UK - Trustees risk maladministration claims unless they invest defined contribution funds immediately, lawyers warn.
Pensions ombudsman David Laverick said Winterthur Pension Trustees had committed maladministration by taking too long to invest funds in a self-invested personal pensions scheme.
The case was brought by Mr R Hall who claimed he had suffered financial loss as a result of the delay.
The ombudsman heard that:
- Winterthur received the instructions to invest Mr Hall’s contributions with two investment providers – M&G and Skandia – on November 6, 2000.
- Winterthur received cleared funds from Mr Hall on November 22.
- Winterthur forwarded Mr Hall’s instruction and cheques to the M&G and Skandia on November 30.
- The investments were made on December 5 and 6.
The ombudsman awarded Hall compensation of £852.69 – the difference between the relevant unit prices achieved on December 5 and 6 and those which would have been achieved on November 27 and 28.
Laverick said: “The scheme provides a self-investment facility for Mr Hall’s future pension provision and any investment instructions received from him should have been processed by Winterthur as soon as possible.
“The delay in processing Mr Hall’s investment instructions was maladministration and I have seen no evidence to contest his statement that this has caused him financial loss.”
Pinsent Curtis Biddle associate Simon Tyler said: “This apparently simple case takes on a startling significance once the relevant dates are analysed.
“Administrators and trustees should be aware of the significant risks involved in money purchase admin: small delays in investing contributions can lead to large financial losses.”
But he said there was little guidance on how long the delay must be to constitute maladministration.
“This case shows that a delay of six business days is too long, but it also implies that a failure to act immediately may also be too long.”
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