Prudential has refused to compensate thousands of pensioners who face a higher tax bill this year because it gave HM Revenue & Customs the wrong tax codes.
The insurer admits it submitted the wrong PAYE codes for 2006-07, meaning 5,500 higher-rate taxpaying male annuitants underpaid income tax on their monthly payments.
Pru has written to the annuitants warning them that they will have to pay an extra 2.2m in total to make up for the underpayments. This equates to about 33 extra a month for each annuitant during the coming tax year.
It has ruled out compensating the pensioners as it says no one has suffered a financial loss.
A spokesman says: “We have written apologising for the stress and inconvenience this matter has caused as a result of insufficient tax deductions being made from pension payments. The issue arose due to human error in compiling the information we sent to HMRC. We are unable to make any payment towards the tax that has been underpaid as the taxable individual must pay all tax due.”
Jamieson Financial Management principal Bruce Jamieson says: “This is absolutely disgraceful. The Pru should settle the difference and take the hit on the chin.”