Of late I notice there has been quite a lot in the news concerning Aegon UK and the way that advisers have felt they have not been treated particularly fairly.
However I would like to draw people’s attention to a wider issue and ask whether this firm is actually treating customers fairly.
This firm, years ago under the Scottish Equitable guise, decided to offer guaranteed annuity rates. In common with other firms that have offered these, they appear to do their best to ensure that customers are kept as far as possible in the dark about this option and certainly avoid bringing it to the forefront when vesting becomes an option.
Even then, when the fantastic rate of (in this case) about 10.8 per cent is chosen, it seems they do their utmost to try and put the potential annuitant off it.
It appears last on the quotation under a plethora (six in all) of very poor and banal alternatives, the best of which offers a rate of 4.4 per cent. This is obviously designed to thoroughly confuse the customer. With regard to the GAR, the company insists on paying it annually in arrears and then offers no guarantee whatsoever. So, for example, if somebody reaches his vesting date this month he has to wait until August 2015, and if he dies before that he has absolutely nothing.
I do not really care what the contract says originally, I thought the regulator was supposed to be looking at old contracts, as well as new ones to see if customers were being treated fairly. If the regulator thinks this is fair treatment, then I really do wonder what their job is at Canary Wharf.
Harry Katz
Principal
Norwest Consultants
Middx
RIGHT TO REPLY
Guaranteed annuity rates provide an upfront guarantee on the level of benefits a customer could receive in retirement and were a feature of a those sold mainly before 1990. While customers can benefit from higher rates of income, there are other considerations. These products originally offered access to just one type of annuity. For example, not all provided a joint life annuity.
We have always tried to make people’s options clear, and the open market option means providers are required to inform on all the options.
Guaranteed annuity rate products vary; some pay out annually, others offer greater flexibility. Most pay out annually as it was deemed simpler for customers to determine the benefit of their guarantee.
Spokesman
Aegon UK
