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Friends slated for block on windfalls

A Belfast IFA has lambasted Friends Provident for denying some rebate-only pension scheme members windfall payouts when it demutualises.

Aon McMillen Consulting senior consultant Richard Oats says he was puzzled when colleagues and clients were sent paperwork to validate their claims to windfalls ahead of the demutualisation.

Oats had joined a rebate-only pension scheme before Friends announced its intention to demutualise last year.

But because there had been no contribution made to the policy before March 31 -a week before the end of tax year – Friends ruled that while Oats was a scheme member he was not a member of Friends and not eligible for windfall shares.

Rebate-only pensions entail the rebate of National Insurance contributions earmarked for Serps paid annually after the end of the tax year by the Department of Social Security, leaving individuals with no control over when contributions are made.

Oats says: “Some members of rebate-only pension schemes with Friends might not realise they do not have a valid windfall claim. The policy documentation for the pension is headed with the words &#39membership schedule&#39. Friends is just splitting hairs.”

Friends Provident communications manager Jim Murdoch says: “We have tried to get this resolved by writing to the DSS to confirm payments into individual policies by March 31 to ensure they would have a valid windfall claim. If this particular case did not receive their contribution, then I believe the complaint is with the DSS.”

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