View more on these topics

Aviva to compensate policyholder over GMP errors

Aviva must compensate a policyholder for the way it administered their guaranteed minimum pension, the Financial Ombudsman has ruled.

In the case, Mr C complained Aviva made mistakes when telling him about his retirement benefits.

His plan was migrated to Aviva in 2015 when it acquired his original plan provider and an inputting error changed the monthly GMP to a weekly one.

This inflated the correct income figure by a factor of more than four and although Aviva has made a redress offer, Mr C said it did not adequately reflect his distress and inconvenience.

He says Aviva should pay him income at the mid-point between his actual entitlement and the higher of the erroneous projections sent to him.

Aviva acknowledged its errors and agreed to increase its offer to Mr C from an initial £800 to £1000 for his trouble and upset.

It also agreed to increase the interest rate payments Mr C could have received from his annuity in November 2017 from 1.5 per cent to 8 per cent.

The FOS adjudicator said Aviva’s offer to settle this complaint was reasonable in the circumstances and Mr C was only entitled to receive the GMP that his plan value reflected.

Mr C did not agree and reiterated Aviva’s errors had caused him considerable distress and exacerbated his fragile state of health.

He said that as a compromise, he should receive income at the mid-point between the now accurate GMP and the higher of the later projections sent to him by Aviva.

An agreement was not reached and the case was referred to ombudsman Terry Connor who sympathised with Mr C’s situation.

He understood that Mr C’s realisation that his actual income entitlement, when compared to some of the estimates previously given to him, may have exacerbated his poor state of health.

The crux of Mr C’s complaint was whether he is entitled to receive a different, higher income than that finally calculated by Aviva.

But Connor points out Mr C is only entitled to receive the final value generated by his pension plan.

Therefore whatever errors Aviva may have made historically, it has now accurately confirmed the returns generated by Mr C’s plan and the benefits it will provide.

Connor says the FOS does not consider investment performance alone a valid cause for complaint because risk is intrinsic to investment decisions.

He adds it is not for the ombudsman to question investment decisions of investment managers made in good faith unless there is evidence to the contrary.

Connor says he might dis-apply the principle Mr C is only entitled to receive the benefits his plan has generated if Mr C can show he made financial commitments on the expectation of receiving a higher income based on projections given to him.

In upholding this complaint, Aviva is ordered to pay Mr C £1,000 for the trouble and upset it has caused him by its errors.

It must also apply simple interest at 8 per cent to the income Mr C could have received from his plan (if he chooses to take his benefits now) from November 2017 to the date of settlement.

An Aviva spokeswoman says: “We are aware of the ombudsman’s decision and will abide by it.”



IFAs urged to be wary of Lloyds GMP ruling fallout

IFAs who advised clients in contracted-out schemes with guaranteed minimum pension benefits to transfer out should watch the fallout of a key Lloyds ruling closely, lawyers have said. In October the High Court ruled Lloyds Banking Group must alter its pensions benefits for men and women. The case focused on GMPs for employees whose employers […]

DWP seeks help solving £13bn GMP equalisation problem

The Government has issued a plea to the pensions industry for help devising a solution for equalising guaranteed minimum pension payments between men and women. GMPs are the minimum level of pension an occupational scheme must provide to people who contracted-out of the state earnings related pension scheme between 6 April 1978 and 5 April […]


Govt criticised over £13bn GMP equalisation plans

The Government is facing mounting industry opposition over plans to equalise guaranteed minimum pension payments between men and women. GMPs are the minimum level of pension an occupational scheme must provide to people who contracted-out of Serps between April 6, 1978 and April 5, 1997. On May 17, 1990 the European Court of Justice ruled […]


DFM buys stake in national IFA Continuum

Marlborough Holdings Group has acquired a 19.9 per cent stake in a national IFA Continuum Financial Services for an undisclosed sum. Continuum said the Marlborough Holdings Group’s company – Marlborough Investment Management – that provides discretionary fund management services, will collaborate with the IFA to “further support their strong business growth plans”. Continuum Financial Services […]


News and expert analysis straight to your inbox

Sign up


There are 2 comments at the moment, we would love to hear your opinion too.

  1. Surely if Mr C is only going to draw his benefits now, he should also have the annuity calculated as the better of the GAR which the GMP effectively is, or an underwritten annuity which could well be better if his life expectancy is seriously reduced

    • Aviva do offer enhanced (underwritten) annuities however regardless of if Mr C qualifies for this or not the guaranteed minimum pension (GMP) income MUST be paid from the relevant age and if that means an uplift to the fund value is required then that liability/gap will be covered by Aviva. The cost of covering the GMP liability is often quite high.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers. Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and thought leadership.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm