20/10/08 Mr Northan – Pensions Ombudsman’s Determination
20 October 2008
Complaint
Mr Northan complained that Zurich Assurance Ltd ( “Zurich”) did not make reasonable efforts to trace his son’s next of kin within two years of his death. As a result, an unauthorised tax charge of £4,624 arose, payable by Mr Northan, which would not otherwise have been due.
Facts
Mr Northan’s son was employed in the family business with his father, and had a personal pension plan with Zurich. When he originally established the plan, he gave Zurich details of his home address and his employer’s address. Both addresses subsequently changed, but Zurich were not informed.
Mr Northan’s son died on 6 February 2004, and Zurich were notified of his death by HMRC.
In Spring 2007, Zurich managed to trace Mr Northan via the 192.com website. On 19 April 2007, Zurich notified Mr Northan as his son’s next of kin that a lump sum of £11,560.43 was payable, but that this was subject to tax of £4,624.17 as more than two years had passed since his son’s death.
Determination
The Ombudsman concluded that Mr Northan’s son should have kept Zurich informed of his changes of address. However, he had seen no evidence of what Zurich did in 2004, 2005 or 2006 and agreed with Mr Northan’s submission that it would not have been difficult to trace the company even before 192.com was available.
The Ombudsman decided that Zurich did not take adequate steps to trace Mr Northan’s son’s next of kin within a reasonable time. He upheld the complaint against Zurich and ordered Zurich to pay £4,624.17 to compensate Mr Northan for the tax deduction, together with interest from the date of Mr Northan’s son’s death to the date of payment.
Conclusion
This determination has important implications for trustees, as it highlights the need to take all reasonable steps to trace beneficiaries within two years beginning with the earlier of the day on which they first knew of the member’s death and the day on which they could first reasonably be expected to have known of it.
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