Investment consultancy and human resources giant Mercer has come under fire again after being accused of allowing a client to transfer part of their pension before asking for it back.
The client’s financial adviser, who did not wish to be named, told Professional Adviser he was working with the client and his wife, who were both 55, and wanted to retire.
The husband had the largest pension pot but it would only become available to the couple in five years’ time, at age 60 so he requested a partial transfer of the client’s defined contribution (DC) and defined benefit (DB) scheme from the firm totalling £350,000.
Mercer confirmed the client could make the transfer and so he handed in his notice at work to officially retire. The adviser said that was as much of the contact they had with Mercer – the client had also left the scheme a couple of years prior.
All was going well, the adviser added. The transfer was taking a while, but they did not think much of it.
The client requested the partial transfer be made to a Prudential scheme, which was eventually took place on 16 August, totalling £282,293.82. However, this was some £70,000 less than what was requested to be transferred, which Pru flagged with the adviser.
In response to Pru’s warning, the adviser contacted Mercer asking why it had not sent the full amount. However, instead of receiving an answer to that enquiry, Mercer replied to say it needed all of the money returned.
This was because the client was part of the “Pre’ 89th 60ths – Post’ 89 100ths class.” Those members were not entitled to a partial transfer of their benefits, something the adviser was not made aware of.
“We got an email back going: ‘Actually, we shouldn’t have given them anything and we need that money back please immediately,'” they said. “So the client has no money for five years potentially.”
Pressing buttons
As a result, the adviser said they were having to look at other ways to ensure the clients can still retire. Luckily, the client had a few smaller pension pots, which means they can afford to retire, but those savings would only last them a short while.
The adviser added: “He has a couple of months but he is now having to drawdown on an ISA and tax efficient investments for a couple of months until we get this sorted, which is not very good.”
“It begs the questions of how many other members within this scheme in this class have been transferred out when they shouldn’t have because, had we not flagged that they had not sent us £350,000, we’d have gone ‘oh cool that’s the transfer in and he may not have been entitled to it’.”
“They’re clearly just pressing buttons and sending money out willy nilly without doing any checks,” they continued. “They are pension administrators, they need to administrate pensions and they can’t do that very well.”
The adviser also said they and their client were not told they were entitled to a ‘no worse off guarantee’, which would have given the client a safeguarding benefit if he was to make the transfer.
‘End in sight’
Following a series of complaints, the adviser said he finally had a call with Mercer on 9 September. The firm said it would now allow the client to proceed with the non-statuary transfer – effectively what was requested in the first place.
Mercer acknowledged it failed to provide correct information on two occasions and confirmed the adviser had specifically asked them if they could move all the money purchase benefits separately from the DB benefits.
Despite the difficulties faced, the adviser has said the end is in sight for his client – he is set to discuss the options with his client and then get back to Mercer. He has also requested they pay the initial transfer fee for the client.
He said: “We’re also not amazed by the almost insincere apologies to the client – they feel like it’s a little mistake that can be glossed over.”
A spokesperson from Mercer said that, in the “rare instances where a mistake is made”, it works closely with the clients, the members and their IFA to arrive at a satisfactory outcome.
They added: “Within our culture of continuous improvement, we seek to learn from such incidences to further improve our service.”