News | November 24, 2021

PART 4 – Calculating the Investment Loss on Delays to Scheme Transfers

We are increasingly seeing issues around how investment loss is calculated where there are delays in transferring a pension from one provider to another when pension transfers haven’t gone according to plan. We have, therefore, put together our thoughts on how to calculate investment loss in typical scenarios that we are seeing more and more frequently.

How should transfer complaints be dealt with?

When a member has a complaint about a pension transfer, the starting point is to speak with the pension provider or scheme administrator. If the issue can’t be resolved, then it may be necessary to write a formal complaint to the provider or administrator in accordance with their complaints procedure. In most cases, complaints can be resolved with the provider directly. However, there are occasions where it might not be possible to reach a resolution. In which case, members have two authorities they can approach depending on the type of pension that they have: (i) The Pensions Ombudsman (“TPO”) or (ii) the Financial Ombudsman Service (“FOS”).

Members of an occupational or personal pension scheme can bring a complaint to TPO whereas members can only bring a complaint to the FOS if the business they are complaining about is regulated by the Financial Conduct Authority – that is, most providers of personal pension schemes that are administered by an FCA-regulated business. In practice, most members of a personal pension scheme can choose between bringing their complaint to TPO or FOS whereas a member of an occupational pension scheme can usually only bring a complaint to TPO (although, there are exceptions). Providers typically have 8 weeks to respond to a formal complaint directly, before TPO or FOS can review the complaint.

Over what period do you calculate the investment loss?

The investment loss on a delayed scheme transfer will be calculated over the period which is usually between when the transfer should have taken place and when the transfer actually took place. But when exactly should the transfer have taken place?

To help work through the issues, we have set out below the fictitious case of Mr Smith whose self-invested personal pension (“SIPP”) transfer request did not go according to plan:

Mr Smith has a SIPP with Provider A comprising of (i) cash assets and (ii) investments in FTSE 100 shares. He contacted Provider A in January 2021 requesting a transfer of the fund to Provider B. This is because Provider B has a particular investment that Mr Smith wants to invest in which he hopes will have a higher return. However, Provider A took months to respond to Mr Smith’s transfer request and took no action to progress his request in the meantime. As a result of the delays caused by Provider A, the transfer did not complete until November 2021. But for Provider A’s delays, Mr Smith’s legal advisers argued that the transfer should have taken place in March 2021. Mr Smith wants Provider A to compensate him for the investment loss caused by Provider A as a result of the delay.

In John Tenconi v The James Hay Partnership, the High Court considered the question of what date should the investment loss be calculated from? The test, in that case, can be summarised as but for the maladministration, when would the funds have been received by the receiving scheme?

In our example, if Provider A had not delayed the transfer because of Provider A’s maladministration, the funds would have arrived with Provider B by March 2021. Therefore, the investment loss period should be calculated on losses incurred between March and November 2021.

Therefore, the date that the transfer should have taken place is a complex factual question that will involve an analysis of the:

  • types of investments the scheme is invested in;
  • correspondence between the complainant and the providers; and
  • what would be a reasonable period for each party to respond by.

We recommend seeking legal advice to determine what the investment loss and investment lost period should be, based on the facts in each case.

What evidence can be used to demonstrate investment loss?

TPO and FOS have applied a couple of different approaches to determining how the investment loss can be evidenced.

  1. Evidence provided by the complainant

TPO, in Curtis Bank SIPP (PO-26512), requested “satisfactory evidence” from the complainant of the investment loss as a result of the delay. It was for the provider to pay this loss plus any additional charges incurred because of the value of the compensation.

In Lloyds Bank (No 2), the complainant suggested that the financial loss suffered was based on the period of time that the fund was out the market. This was sufficient satisfactory evidence for TPO which suggests that limited evidence is needed to be ‘satisfactory’.

In John Tenconi, the complainant provided evidence of the particular investment he wished to make on the UK leaving the EU. This evidence was enough to show the value of the investment loss he suffered. In the evidence produced by the complainant he gave a detailed explanation of his attitude towards investment and put forward a good case for investing in the FTSE 100.

2. Evidence provided by the provider

In the FOS determination, Aegon (Decision DRN9966911), the complainant showed his willingness to accept investment risk and so it was decided that the provider was to use the FTSE UK Private Investors Income Total Return Index as a benchmark for the loss suffered. In Curtis Bank SIPP (PO-8890) the TPO left the valuation to the providers, based on the information provided by the complainant.

Evidencing the investment loss is very fact focused. Whether TPO or the FOS rely on the complainant’s or provider’s evidence will depend on considerations such as the complainant’s knowledge of the investment loss. The more evidence that can be provided by a complainant to demonstrate a strong aptitude towards investing and their loss, the more likely that evidence would be accepted by TPO and the FOS. However, there is no obligation for TPO or the FOS to follow the complainant’s evidence.


Successful cases in this area have tended to award 8% interest.

Compensation for distress and inconvenience

TPO has confirmed that compensation for distress and inconvenience tends to be modest (often no more than £500). However, in John Tenconi the High Court awarded an amount of £2,000 for the significant distress and inconvenience suffered. Compensation for distress and inconvenience will be a question of fact.

How long must the delay be?

Pension providers need to show they are acting quickly and speaking to the relevant parties so as to not hold up the transfer. TPO and FOS will look at the correspondence between the parties and if a provider is not being proactive this may point towards a delay. As such, it is important that evidence of reasons for a delay are recorded to shield the provider/trustee from a claim for investment loss.


It will only be on ‘rare’ occasions that TPO will order costs. TPO has emphasised in previous determinations that a member has the ability to resolve a dispute with the free assistance of the Pensions Advisory Service and they are encouraged to take this route before seeking legal advice.

However, in certain circumstances they will award costs particularly where an advisor has assisted in arranging the subsequent transfer. Please speak to a member of our team if you would like to know more about the recoverability of costs.

Further considerations for trustees and providers

It is imperative that trustees and providers do not cause any unnecessary delays to the transfer. This relates to both the transferring and transferee provider. If there is a delay, good communication will help to mitigate against liability.

Pension providers and trustees must be careful about providing information to members about how long a transfer will take. Whilst TPO and FOS are unlikely to rely on this, they might consider this in a determination on delay.

Trustees and providers must consider any transfer requests alongside the new transfer regulations which came into force on 30 November 2021 (click here for Alison Hills’ article in this issue). The new powers on trustees and scheme managers are likely to impact the timeframe for completing a transfer.

A delay under the transfer regulations is more likely to kick in if the fund is being transferred to a less known provider. With more emphasis on ESG in today’s world, a member might be more likely to invest in one of these new providers. Therefore, trustees and providers should obtain legal advice to fully understand their obligations arising under the new transfer regulations.

Please do not hesitate to contact a member of our team if you would like further advice on anything discussed in this article or if you have experienced difficulties where pension transfers have not gone according to plan. We advise a wide range of trustees, pension providers, administrators and individual members.