Will’s pension dropped in value by the time he’d moved it to another fund

Pensions Covid-19

When Will’s pension fluctuated in value due to Covid-19, he asked his provider for information about moving to a lower-risk fund. He was unhappy he hadn’t got the information he needed until a second phone call, and that his pension had fallen in value in the meantime. We decided that Will should have got the information first time, and told the provider to put things right as if his pension had been moved after his first phone call.

What happened

Will contacted us when he got into a dispute over moving his pension during the Covid-19 pandemic.

He told us that, since passing the age of 55, he’d been considering when to draw his pension and had previously discussed his options with a financial adviser. In the spring of 2020, when financial markets had begun to move sharply in response to the spread of Covid-19, he’d contacted the provider to discuss options for taking his pension.

Will said that this initial call resulted only in him being sent information by post – whereas a few days later, in a further call, he’d received much more detailed information that helped him make the decision to move his pension to a lower-risk fund.

He’d complained to the pension provider, which had told him that the second call handler he spoke to had wrongly offered financial advice. The provider had offered him £200 compensation for this.

But Will was concerned his pension had fallen in value because of the delay in getting the information he wanted – and asked us to investigate.

What we said

We asked the pension provider for recordings of the two calls with Will.

In the first, it was clear to us that Will’s primary concern had been the volatility in financial markets. He’d been keen to understand the risk profile of his pension fund at the time, and how he could move to a lower-risk fund.

The call handler had confirmed that, on the provider’s risk scale, Will’s pension fund at that time had a risk rating of medium. They said that to move to a new fund, Will would need to specify the name of the new fund he wanted his pension invested in. They said they could send details of the fund choices by post, which would take five to ten business days, but not by email.

In the second call, three days later, Will spoke to a different call handler, repeating his wish to move his pension to a lower-risk fund. This call handler provided Will a new valuation of his pension, which showed it had fallen more than 5% in value since the first call.

Will then asked the call handler if there was anything he could do to progress the switch of his pension into a lower-risk fund. The call handler gave him an overview of the pension deposit funds with a low-risk rating, including their comparative performance, brief details of the investment approach and management charges. Will chose one of the funds and asked to transfer his pension.

The pension provider told us the first call handler had followed their normal process –and that this approach, including posting fund information, ensured call handlers didn’t inadvertently provide financial advice. Requiring customers to clearly state which fund they want their savings moved into is another way of ensuring this.

In our view, the circumstances at the time weren’t routine. Given the large swings in valuations happening daily, and Will’s level of concern about it, we didn’t think it was reasonable to expect him to wait up to ten business days to receive by post the information he needed to change his fund. In taking care to provide the basic information Will asked for, while also clearly communicating that other options and strategies were available, we didn’t agree the second call handler had offered financial advice.

We upheld Will’s complaint, and told the pension provider to treat the instruction to move his pension to his chosen lower-risk fund as though it had been received in the first phone call. We took into account that the provider would normally make this kind of transaction at end of the day, and that the price at the end of the day might differ slightly from the valuation Will had been given earlier in the day on the phone.