Two pension providers look likely to pay compensation to thousands of pensioners who bought the wrong annuity. Up to 200,000 customers of Standard Life and Prudential may have missed out in retirement.
Q. What’s the problem?
A. The problem is that pension providers Prudential and Standard Life may not have given thousands of customers enough information about what are called enhanced annuities – and about the fact that they may have been eligible for one.
Enhanced annuities pay out a higher income for life, if you have an illness, such as diabetes or have had a stroke, or have a lifestyle condition (such as being a smoker, overweight or a heavy drinker). The additional amount they pay out will depend on the illness or condition you have and how severe it is. Many people are eligible for these annuities, but not many are aware of them.
Q. Who’s affected?
A. You may be affected if you bought an annuity from Prudential or Standard Life after July 1st 2008. Although these annuities weren’t sold with financial advice, Standard Life and Prudential may not have given customers the information that they needed about enhanced annuities. If they had, these customers may well have shopped around for an annuity with a provider that offered enhanced annuities.
It doesn’t matter whether you had a workplace pension with Standard Life or Prudential, or a personal pension. These companies will review the way your annuity was sold and, if you would have qualified for an enhanced annuity, you’ll be entitled to compensation.
In Prudential’s case, the information that’s being reviewed was given over the phone, to customers who saved in their pension and bought their annuity from Prudential and whose pension pot was worth at least £5,000 In Standard Life’s case, I don’t know if it’s information provided over the phone or online. I’ll update this article when I find out.
Q. Who’s not affected?
A. If you bought your annuity from Prudential or Standard Life after being advised to do so by a financial adviser, you’re not affected. You’re also not affected if you bought an annuity from Prudential or Standard Life after saving for your pension with another pension provider. The final group of people who aren’t affected are those who saved for their pension with Prudential or Standard Life but who bought an annuity with another annuity provider.
Q. Where can I get more information?
A. Prudential has some information on its website or you can ring them on 0800 678 3166 or on 44 (0)1903 768 639 from outside the UK. These lines are open between 8.30am and 6pm, Monday to Friday. Prudential says that if you ring, you won’t be given any specific information about your case or the review, at this stage.
Standard Life has included information about the review in its annual results. It says it’s set aside £175 million to compensate customers who may not have been given the right information. However, I couldn’t find any information the Standard Life website for customers. I’ll update this article if I find a useful link.
Shopping around for a pension income. Make sure you shop around for an annuity if you buy one
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