The Pensions Ombudsman has dismissed a complaint from a policyholder who said Royal London incorrectly interpreted the level of annuity that should be paid to him.
The dispute centres on whether the policyholder understood his benefits properly and if Royal London adequately communicated what these were to him.
In the case Mr S says the policy from Royal London, which dates back to December 1983, clearly states that, from age 60, it would pay an annuity per year of £2,127, “exclusive of profits”.
He interprets this wording to mean profits would be added and increase his basic annuity.
Furthermore he disagrees with Royal London’s interpretation that the policy provides him with a fund that can be used to purchase a pension either through it or on the open market.
Similarly, he challenges the basic annuity is a promise that he will not receive less than the £2,127 per year guaranteed under the policy.
Alternatively, Mr S suggests the policy carries a guaranteed annuity rate of £8.72 per £100 and if this rate is applied to the value of the policy, the resulting annuity would be around £2,300 per year higher.
Mr S also complains information supplied to him has not been clear and Royal London has failed to properly explain the rationale for how it proposes to pay his benefits.
In its rebuttal, Royal London argues the statements about the policy explain how it works, Mr S would have seen these and a fund will build up under the policy to which bonuses are added.
That fund will be used to buy a pension, and there is a minimum amount of pension that can be paid.
In the ruling, deputy pensions ombudsman Karen Johnston explains while Royal London could have supplied Mr S with better explanations and sooner it is broadly right on the key points.
She says: “Royal London was correct in its interpretation of the policy and presented the correct options to Mr S. It also told him that he could take his benefits and top up later if necessary, but he chose not to take them.
“Therefore I do not consider he can demonstrate that he has been kept out of his money in the manner which he asserts.
“In the circumstances I do not find maladministration which has caused Mr S has any significant injustice.”