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ScotWids introduces guaranteed annuities grace period

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Scottish Widows has introduced a three-month grace period for customers with valuable guaranteed annuity rates.

When the pension freedoms came into effect in April, the firm changed its policy so people with GARs embedded in their policies would not lose them for three months after their nominated retirement date.

Previously, the provider would honour the GAR for up to a week, but only in certain conditions such as illness.

Scottish Widows retirement propositions director Stuart Paton Evans says: “We recognise that people have a wider choice than ever before and want to ensure they have enough time to make an informed decision at retirement and seek financial advice where appropriate.”

Closed-book provider Phoenix Life says it already offers a 90 day grace period where a GAR applies only at a fixed point, known as the spot date.

A Standard Life spokeswoman says the company has not applied a cut off point since 1999.

Likewise, Aegon customers can claim their GAR indefinitely, but Prudential say they have an informal grace period of a month.

Dobson & Hodge financial services director Paul Stocks says: “It’s a welcome move, but I suspect firms that are extending grace periods are actually doing it for another reason such as they are struggling to process paperwork quickly.”

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Comments

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

  1. Maybe they’ll backdate this for my client who missed his cut off date by two days due to a Christmas holiday and received 5% instead of 11%.

    Some chance.

  2. They appear to have been doing this for a while- their service became so abysmal at one point last year they were unable to process applications or get retirement packs out in time for the spot date so gave everyone a bit of grace.

  3. @Alan Lakey. Likewise, I had a client who returned the paperwork to Scottish Widows 1 day late and they refused to back down. We took it to the FOS and tried to argue the case on the basis of Treating Customers Fairly. How can a client pay every contribution on time for 20 years and then be refused such a valuable benefit on a technicality. Disgusting.

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