Natwest Group Pension Fund Formerly Royal Bank Scotland Group Pension · CAS-102929-X3S4

CAS-102929-X3S4

Ombudsman’s Determination Applicant Mr K

Scheme NatWest Group Pension Fund (formerly Royal Bank of Scotland Group Pension Fund) (the Fund)

Respondent NatWest Group Pension Fund Trustee (the Trustee)

Outcome

Complaint summary

Background information, including submissions from the parties

1 CAS-102929-X3S4

On 5 April 2002, following the merger of Royal Bank of Scotland and National Westminster Bank, the Staff Scheme merged into the Fund, and the Fund was renamed the Royal Bank of Scotland Group Pension Fund. The Fund later became the NatWest Group Pension Fund.

Mr K’s complaint

2 CAS-102929-X3S4 In addition to the items in paragraphs 2 and 3 above, Mr K’s complaint to The Pensions Ombudsman (TPO) included a number of other points not accepted for investigation at the jurisdiction stage. The jurisdiction decision was communicated to Mr K in a letter dated 27 June 2025, and the excluded points do not form part of this Determination. Some of these were decided on, and not upheld, in my Determination of the case of Mr N (CAS-102084-N1D3) (the Lead Determination).

The sequence of events is not in dispute, so I have only set out the salient points. I acknowledge there were other exchanges of information between all the parties.

• He had discussed the option of transferring his benefits out of the Fund several times with his advisers in the last 10 years. For example, prior to 2017, he had discussed transfer out options with his financial adviser on several occasions, but had decided against it “on balance…given what we believed to be the strength of the 5% or RPI index linking promise, amongst other things”. In general, the advice he had received was that the Fund was advantageous, “specifically in terms of the 3 CAS-102929-X3S4 5%/RPI promise”. As a result, he had decided against taking a transfer on the basis, among other things, of that promise.

• He had received further transfer value illustrations in respect of his benefits in the Fund, including a quotation for £1,217,578 on 29 June 2020. At the time, he had considered the transfer option very seriously as this was a very significant sum and his financial adviser was very positive about transferring out at this level. He decided not to do so based on what he considered to be the “gold standard” of the RPI/5% pension increases that he thought the Fund offered.

• In relation to the 2020 Communication, the Trustee should have prompted him to take expert advice on the implications of this email. However, it was recommended that he take no action as the email was for information only.

• It acknowledged that communications issued to members of the Fund by it and Mr K’s past employer had incorrectly described pension increases for former Staff Scheme members.

• For an estoppel argument to succeed, it was necessary for Mr K to demonstrate that he had taken irreversible actions in reliance on an incorrect statement and that he would have acted differently if not for the statement.

• While there had been inaccuracies in some of the communications, and while Mr K may have placed some reliance on these communications, he had not demonstrated that he would have acted differently if the correct information had been available to him at the time. In particular:-

o He had provided no documentary evidence of the discussions he had with his financial advisers or that his decision making was primarily based on his entitlement to pension increases rather than other factors.

o He had not demonstrated that he would have transferred out of the Fund if he had been given accurate information. Having a defined benefit pension under the Fund was a very valuable benefit and Mr K had received financial advice to this effect. A large portion of his benefits was unlikely to be significantly impacted by this issue as:

▪ his benefits built up before 6 April 1997 were subject to RPI increases capped at 3%; and

▪ his benefits built up from 6 April 1997 to 5 April 2005 were subject to a statutory underpin which was currently based on increases in the CPI capped at 5%.

o With the exception of the June 2020 quotation, the transfer value illustrations that Mr K received would have been based on the 5% cap on pension 4 CAS-102929-X3S4 increases for all pensionable service after 5 April 1997. So, they were likely to have been higher than if based on his true pension increase entitlement. While Mr K said that he may have transferred out if he had been aware of his correct entitlement, in those circumstances the transfer value quotations would have been lower, as they would have taken into account a lower pension increase entitlement. It seemed unlikely that he would have decided to transfer out based on a lower transfer value.

o The June 2020 transfer value quotation, which Mr K said he considered to be one of the most attractive, was received after he had been informed of the correct pension increase rate. So, he had the opportunity of taking this into account and notifying his financial adviser before deciding not to transfer out. If he had not passed on the corrected information on pension increases to his adviser, then this would indicate that it was not a primary concern to him. If he did pass on this information, then the implications of it should have been considered during the transfer decision. Either way, this supports the view that Mr K would not have acted differently in relation to this or earlier transfer opportunities.

• The 2020 Communication did not “recommend” that Mr K take no action. Rather, it informed members that they were not required to do anything. It was suggested that deferred members, like Mr K, may want to obtain up-to-date retirement or transfer quotations. As such, it was not reasonable for Mr K to have continued to rely on statements about pension increases issued prior to the 2020 Communication when making decisions after he had received the 2020 Communication.

Adjudicator’s Opinion

Mr K’s reliance on the incorrect information

5 CAS-102929-X3S4

• there had been a clear promise or a representation on which it was reasonably foreseeable that Mr K would rely;

• Mr K acted in good faith and relied on the representation; and

• as a result, Mr K acted to his detriment.

6 CAS-102929-X3S4

The 2020 Communication

“We are notifying you about a change that will affect the increases to your pension when you start to receive it.

The increases to your pension when you start to receive it may be lower than you were expecting due to this change.”

Distress and inconvenience

7 CAS-102929-X3S4

In the Adjudicator’s view, an award of £500 was appropriate for the significant injustice sustained by Mr K as a consequence of the maladministration.

Mr K did not accept the Adjudicator’s Opinion, and the complaint was passed to me to consider. In response to the Opinion, Mr K provided his further comments which are summarised below:-

• Mr K disagreed with the Adjudicator’s view that he had not suffered a direct financial loss as a result of the Trustee’s maladministration. He said that, every year in which he has drawn a pension and in which RPI has exceeded 3%, he incurred a financial loss. This loss will be compounded over the remainder of his lifetime, creating a disadvantage compared with the position he would have been in if the Trustee had adhered to its written promise of a 5% cap on pension increases.

• Mr K maintained that he had suffered a loss from not transferring out in June 2020. He provided a market analysis, obtained via Chat GPT, which he said used conservative assumptions and indicated that he would now be significantly better off had he transferred out at that time. He also said that this demonstrated that doing nothing, as suggested at multiple points in the 2020 Communication, had directly disadvantaged him financially.

• Mr K referred to the Adjudicator’s view, in relation to the 2020 Communication, that “whether members required financial advice on this matter was a matter for each member to decide.” He disagreed with this on the basis that The Pensions Regulator (TPR) required anyone considering transferring out £30,000 or more to seek advice from a Financial Conduct Authority regulated advisor. He said that, given that his only other option was to transfer out, the Trustee’s suggestion to do nothing, which it made three times, constituted a course of action and form of advice. He asserted that this should have been accompanied by a clear recommendation to seek independent, qualified financial advice.

• Mr K said that, nowhere in the 2020 Communication, did the Trustee indicate the scale of the implications of the change to the pension increase cap. He also referred to the statement that members may wish to obtain an “up-to-date retirement or transfer-out quotation,” without recommending regulated, independent advice. He said that this appeared to be contrary to the guidance from TPR.

8 CAS-102929-X3S4

• Mr K had retired in April 2024. So, it was reasonable to assume that retirement had been at the forefront of his mind, and that he had begun to take substantive steps to plan his retirement, when the issue was notified to members in the 2020 Communication. This would not be the case for all members.

• A significant proportion of Mr K’s service was impacted by the issue. So, it was reasonable to assume that being told about it in 2020 would have caused him more distress than for many members.

• The Trustee considered Mr K’s awareness of the erroneous communications, and taking them into account during his retirement planning, were key elements of the assessment of whether a member had suffered distress and inconvenience. While the Trustee did not consider that Mr K had a valid case for estoppel, he had presented a more compelling case that he had sustained non-financial injustice than would apply to most members.

I have considered the additional points raised by Mr K and the Trustee. However, they do not change the outcome, and I agree with the Adjudicator’s Opinion, as I shall explain in paragraphs 41 to 52 below.

Ombudsman’s decision

9 CAS-102929-X3S4 I agree with the Adjudicator’s view and find that Mr K’s decision not to transfer out of the Fund in June 2020 was not based on the incorrect information that had historically been provided by the Trustee. In particular, as the Adjudicator pointed out, when Mr K received the June 2020 transfer value quotation he would have been aware of the correct rate of pension increases he would receive from the Fund once his pension was in payment, as he had received and read the 2020 Communication.

Mr K has submitted that the market analysis that he obtained via Chat GPT (see paragraph 38 above) serves as evidence that he sustained a loss in consequence of having remained in the Fund rather than transferring out in June 2020. As I have already found that the historically incorrect pension increase information cannot have formed the basis for Mr K’s decision to remain within the Fund, I need not make a finding as to whether or not he would have been better off had he transferred out of the Fund in June 2020. However, if I had needed to make such a finding, I would have had to take into account the reliability of information obtained in this manner, as well as the availability (or lack thereof) of any evidence as to where Mr K would actually have transferred the cash equivalent of his benefits under the Fund.

The 2020 Communication

Mr K has made a number of references to the three times in the 2020 Communication where the reader was told that they were not required to take any action. He has said that taking no action, by not transferring out his benefits, has directly disadvantaged him financially.

Further, Mr K considers that the Trustee should have advised him to seek financial advice, and that this was inconsistent with TPR’s requirement for such advice to be sought when transferring out sums of £30,000 or more. He has referred to the following statement, which was included in the 2020 Communication, and has said that its inclusion, without any recommendation that members obtain independent advice, appears contrary to TPR’s guidance:

“Remember, you can get various quotations quickly and easily on your pension record via the Fund website – see below. You may wish to run an up-to-date retirement or transfer quotation.”

I understand that Mr K’s references to TPR’s guidance relate to the statutory requirement for trustees to check that a member has received ‘appropriate independent advice’ before making a transfer payment of £30,000 or more out of the pension scheme in respect of ‘safeguarded benefits’1 that would result in those benefits being converted to ‘flexible benefits’2 (the Advice Requirement). The Advice Requirement is set out in section 48 of the Pension Schemes Act 2015, and in

1 Broadly, ‘safeguarded benefits’ includes defined benefits calculated by reference to a member’s salary and length of pensionable service, such as those that Mr K is entitled to under the Fund (section 48(8) Pension Schemes Act 2015). 2 Defined as money purchase benefits, cash balance benefits or other benefits that are calculated by

reference to an amount available for the provision of funds (section 74 Pension Schemes Act 2015). 10 CAS-102929-X3S4 The Pension Schemes Act 2015 (Transitional Provisions and Appropriate Independent Advice) Regulations 2015.

The Advice Requirement was introduced in order to ensure that members had “properly considered the implications of giving up the element of guarantee attached to safeguarded benefits in these circumstances”, as explained in section 9 of the Pension Schemes Act 2015: Explanatory Notes. It does not apply to situations where members of defined benefit pension schemes, such as the Fund, decide not to transfer out, and it is entirely separate from the matter of informing members of the correct rate of their pension increase under a pension scheme. Had Mr K requested a transfer out on the basis of the transfer quotation he received in June 2020, the Trustee would have had to ensure that Mr K had fulfilled the Advice Requirement before making the transfer payment. However, while Mr K obtained an up-to-date transfer quotation in June 2020, he did not go on to request a transfer, so the Advice Requirement never arose in relation to Mr K.

I have reviewed the 2020 Communication, and I agree with the Adjudicator’s view that the statements that members did not need to take any action were solely a confirmation that the correct rate of pension increase would be applied automatically going forward without any action being required by the member. As the Adjudicator has pointed out, the 2020 Communication contained a clear summary of the purpose of the 2020 Communication, and the effect that the application of the correct rate of pension increase would have on members’ benefits going forward (see paragraph 32 above). Any decision whether to seek financial advice or not, in light of this information, would have been one for the recipient of this information to take, based on their own circumstances and priorities. Not all of the members who received the 2020 Communication would have been considering a transfer out of the Fund. Nor would they all have started planning for their retirement like Mr K had. The 2020 Communication was a general communication, providing important information on future pension increases.

I have seen no evidence that the content or tone of the 2020 Communication caused Mr K to have suffered any disadvantage. In fact, Mr K clearly took some action following his receipt of the 2020 Communication, as opposed to having taken no action as he claims it advised him to do: he obtained and considered a transfer quotation in June 2020. Therefore, if and to any extent that Mr K is claiming that he relied upon the statement in the 2020 Communication, that he need take no action, to his detriment, I do not uphold that complaint.

In conclusion, I agree with the Adjudicator’s views in relation to Mr K’s complaint. Furthermore, for the reasons stated by the Adjudicator, I agree that a distress and inconvenience payment of £500 is appropriate, acknowledging that this award is based on the specific facts of Mr K’s case, and these facts will not necessarily apply to all cases.

I uphold Mr K’s complaint in part.

11 CAS-102929-X3S4 Directions

Dominic Harris

Pensions Ombudsman 19 March 2026

12 CAS-102929-X3S4 Appendix The 2020 Communication

13 CAS-102929-X3S4

14