The Financial Ombudsman Service has partly upheld a complaint against Aviva Life & Pensions UK after a delay in answering questions led to financial losses.
The complainant, identified in the ruling as Mr S, took out a plan with Aviva in 1985 which was linked to the with profits fund and provided for a guaranteed level of pension on retirement at age 70, or earlier, with a reduced guarantee.
His financial adviser, St James's Place, requested information about the plan over a number of years and it was noted that the quoted transfer value had fallen from around £151,000 in 2017 to £131,000 in April 2021.
Mr S was considering transferring the plan and, with the value continuing to fall, he complained to Aviva in June 2021.
SJP raised further complaints in the same month as Mr S intended to retire that month, at age 65 but, as Aviva had not answered queries, SJP had not been able to advise him properly.
SJP also stated that the transfer value had fallen to £125,005 on June 16, without justification.
Aviva said it had made an error in calculating the values quoted between 2016 and 2019, which were estimates and weren’t guaranteed.
The firm also said the transfer value was based on the pension being given up, taking current annuity rates and various other factors into account.
Aviva apologised and sent Mr S a cheque for £200 for the inconvenience caused.
It said the June 16 2021 value was an estimate but an accurate transfer value of £124,835 had since been calculated.
A transfer application was made and £122,439 was transferred to SJP on September 1 2021.
But Mr S referred his complaint to the Fos. An investigator looked into the case but did not uphold the complaint.
As Mr S did not agree with this decision, the complaint was sent on to the Ombudsman to consider.
Ombudsman's opinion
After examining the complaint, the ombudsman decided to uphold the complaint in part.
They explained Aviva did cause a delay and so it is fair that Mr S be put back into the position he should have been in.
They added that they reconsidered Aviva’s calculations and agreed that, as they are up to date, they do fairly provide redress for the delays it caused and put Mr S back into the position he should have been.
As a result, the Ombudsman said it was not necessary for Aviva to add interest to the calculated redress, unless there was an unreasonable delay in making payment to him.
Directions
To put things right, the Ombudsman stated that Aviva had already undertaken the calculations outlined which indicated a total loss of £4,650.92.
It proposed to pay Mr S £3,953.32 after tax.
However, the ombudsman explained that, when benefits are paid from a pension plan, they provide a taxable income.
As a result, adjusting the compensation to allow for any income tax that would otherwise have been paid ensures the compensation is a fair amount.
