Phoenix has been forced to apologise after sending thousands of deferred pension scheme members an enhanced transfer value offer letter that values the members’ defined-benefit entitlement at the wrong date.
Earlier this month, Money Marketing revealed the insurer had contacted 3,200 deferred members of the Phoenix DB scheme offering up to £2,000 in cash as part of a deal to give up their guaranteed pension rights.
The offer letter sent to Phoenix scheme members, seen by Money Marketing, values a member’s DB pension as at October 31, 2011. However, the figure relates to the value of the member’s pension when they left the company.
The error has caused confusion among deferred members who expected to see a higher amount because their pensions are linked to the RPI, capped at 5 per cent.
One member, who wants to remain anonymous, says: “The majority of people who received this letter are totally confused with what the figures mean and what they should do for the best.”
A Phoenix spokesman says: “The company and the trustees of the pension scheme are aware of this situation and we are very unhappy this error has arisen. Unfortunately, while the pension figures and the transfer values sent to members are correct, the pension is described as being the member’s pension ’at October 31, 2011’, whereas it should be ’at date of leaving the scheme’.
“Should a member engage with the exercise and receive advice from IFA firm JLT, that advice will use a transfer value analysis system report that has been produced on the correct basis. We apologise for any inconvenience this may have caused pension scheme members.”
Hargreaves Lansdown pension investment manager Laith Khalaf says: “Given what the DWP has said on ETVs, particularly on communication, it is unbelievable a company would make such a basic mistake in a letter to members.”