Personal and occupational pension schemes are facing losses of £82m after an Inland Revenue move to recover cash it had paid out in error as contracting out of Serps' rebates.
It has led to many schemes facing big shortfalls as falling investment markets mean the present value of the rebated funds is less than the amount recovered by the Inland Revenue.
Product providers say the Revenue is guilty of double standards because it is refusing to offer any compensation for its mistake whereas life offices and advisers have to compensate policyholders for their mistakes.
The problem has been compounded as life offices and third-party administrators are required by law to invest protected rights' payments within one month of receipt.
Scottish Life head of communications Alasdair Buchanan says: “This is a bad example of double standards. If advisers or providers had done this they would have been obliged to compensate in full. Here, it is the Government which has caused the mistake and is retrospectively taking the money back, leaving people worse off.”
An Inland Revenue spokesman says: “The Revenue has stated that no one should lose out as a result of recovery action and it continues to meet with the ABI and NAPF to establish the way for this to happen.”