Approved Minimum Retirement Fund AMRF Decision Reference 2023-0149

• Case Outcome: Rejected
• Subject Matter: Approved Minimum Retirement Fund AMRF
• Reference: 2023-0149
• Date: 14 July 2023
• Finantial Sector: Investment
• Conducts Complained Of: Switching funds

Decision Ref:

2023-0149

Sector:

Investment

Product / Service:

Approved Minimum Retirement Fund AMRF

Conduct(s) complained of:

Switching funds

Outcome:

Rejected

LEGALLY BINDING DECISION OF THE FINANCIAL SERVICES AND PENSIONS OMBUDSMAN

This complaint concerns the Complainant’s pension fund.

The Complainant’s Case

The Complainant explains that in October 2014, he was made redundant and he engaged

the Provider at that time, to advise him in relation to his pension.

The Complainant says that his funds were invested with a third-party insurance

undertaking, through an occupational pension scheme. He argues that he advised the

Provider that he wanted to manage the funds himself, rather than paying it a charge. He

submits that the Provider agreed to this, and it informed him that his funds would get a 2%

uplift or allocation, when the funds transferred to his management.

The Complainant contends that he subsequently discovered that the third-party insurance

undertaking paid the Provider 3% commission, and that his total fund was locked in, with

exit fees for a period of 5 years. The Complainant submits that the Provider received a 3%

commission, which it referred to in its final response as ‘commission paid on new

business’. He argues that his fund was not new business, as that arrangement was already

being provided by the insurance undertaking. He says that because his fund had not been

moved, he was under the assumption that the Provider was meeting with him and advising

him, based on the fact that it was getting paid from the general management of the

occupational pension scheme.

The Complainant says that there was never any mention by the Provider to him, with

regard to a 3% commission paid by the insurance undertaking, nor was there any mention

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/Cont’d…

to him of any options to invest with other providers. The Complainant submits that it was

only after the paperwork was completed that the Provider informed him that he would be

getting a 2% allocation, but he had no idea at that time that other providers also offered

an allocation amount.

The Complainant contends that if no allocation fee or uplift had been given, he could have

transferred his funds to a different provider, and not been subject to a 5-year contract

with exit fees. The Complainant submits his view that he should have received a 3% uplift

from the Provider, rather than 2%. He contends that the Provider withheld 1% from him,

paid to it by the insurance undertaking.

In a later submission in response to evidence submitted by the Provider, the Complainant

drew attention to an e-mail from the Provider to the insurance undertaking, where 103%

allocation was discussed. He argues that he was never privy to this e-mail, and that it was

never discussed with him. He says that he was never made aware that the Provider would

receive any portion of an allocation from the insurance undertaking, for him moving his

funds.

The Complainant argues that he simply wanted to manage his own funds within the

insurance undertaking. He submits that if the Provider was not advising him, at the very

least, it steered him towards the insurance undertaking, and since his funds were just

moving to his own management, he wonders why he did not receive the full 103%. He

submits that as a broker, the Provider should have offered him choices, as to what other

providers were offering.

The Complainant wants the Provider to pay him the sum of €4,158.82 which he contends is

the amount that was withheld from him, by the Provider.

The Provider’s Case

The Provider submits that prior to the investment, the Complainant was a member of an

occupational pension scheme. It submits that it had no contract with the Complainant but

it had a contract with his employer, as broker to the scheme.

The Provider says that scheme members are only tied to the scheme, when in active

service with the employer, and once they leave employment, they have the option to

move their funds or take the benefits. It argues that no penalties existed which were

triggered by the Complainant leaving the employer’s service.

The Provider argues that in November 2015, the Complainant elected to leave the scheme

and take his retirement funds in the form of a tax-free lump sum and investment in an

Approved Retirement Fund/Approved Minimum Retirement Fund (ARF/AMRF).

The Provider explains that remaining in the occupational pension scheme, was never an

option for a member wishing to avail of the tax-free lump sum. The Provider argues that

the Complainant contracted with an insurance undertaking, through the Provider, to put