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ScotLife admits pension blunder

Some 250 Scottish Life pension customers have seen their fund values drop 12 per cent after the insurer clawed back interest it overpaid without telling them.

Intelligent Pensions was recently quoted a transfer value of £45,510.33 for a client after being quoted £51,690.30 in March 2009.

As the money is in a late-vesting account, which adds interest after the policy’s maturity date, the firm queried the drop.

Scottish Life told the company that from 2007 the late-vesting interest rate was applied to policies “incorrectly at a double rate”. It added that the problem was identified in September and it corrected the policy values, resulting in all affected policies dropping in value. But the insurer failed to inform policyholders of the mistake.

Intelligent Pensions technical director David Trenner says: “This is an appalling error but what makes it worse is that they are happy to grab back the money added to the policy without authority from the client.

“If a shopkeeper gave me too much change, I would not expect him to come running out into the street and mug me to get it back. It seems insurance companies are more than happy to mug their policyholders.”

A Scottish Life spokeswoman says: “In this instance we have not achieved the high standards we set for ourselves. The value of each of these policies is now correct, so the policyholders are in the position they should have been had the mistake not happened.”

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. The FSA must be contemplating the prospect of a fine in their current mood as any failings are used as an excuse.

  2. David does seem to have a lot of anger towards his former employers.

  3. Admittance of not achieving “the high standards we set for ourselves” is hardly any kind of apology. The point is that the policy holders trusted the figures they were supplied with and will have made plans and decisions based on that – to grab back the money with no warning shows a disregard for those customers. In their shoes I’d not give ScotLife another opportunity to disappoint them – irrespective of whether ScotLife is a previous employer of Mr Trenner. ScotLife have dropped the ball – on the toe of their customers, who are now left counting the cost.

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