Personal PensionDec 31 2015

Tenet under fire for annuity advice

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Tenet under fire for annuity advice

The Financial Ombudsman Service has partly upheld a complaint against TenetConnect Limited about advice relating to guarantees included in a client’s pension.

TenetConnect has been ordered by the Fos to pay Mr W a sum of £250 in respect of the trouble and upset caused.

In his assessment, ombudsman Abdul Hafez said it was clear the explanation Mr W received from the TenetConnect adviser about how his plan worked was incorrect in 2013.

Mr W had dealt with the same adviser since late 2002 and in November 2011 the intermediary became an adviser for TenetConnect.

In his complaint, Mr W said he was told his plan included a guaranteed annuity rate (GAR) of 9.7 per cent, which would be used to convert his pension fund to income.

In a letter sent to Mr W in June 2013, he was told he would expect an income of £28,958 each year from his pension.

However, in 2014 Mr W contacted the pension provider and was told the explanation TenetConnect had given did not reflect the way his plan worked.

The plan did not actually have a guaranteed annuity rate.

When he learnt this Mr W believed his pension plan was worth a lot less and he had missed an opportunity to increase his contributions.

Mr W decided to complain to TenetConnect and referred the matter to the ombudsman when he did not receive a response.

Despite the wrong assessment about the GAR - the plan was in fact a guaranteed basic annuity (GBA) - the Fos adjudicator did not think this meant Mr W’s plan was any less valuable.

Additionally, he did not believe Mr W would have acted any differently had he known the true circumstances.

But the adjudicator thought Mr W’s complaint should be upheld in part.

Mr Hafez said: “Mr W believed his plan accumulated a fund that would be converted to an income when he retired. He believed it was the rate used to convert a fund to income that was guaranteed.

“This wasn’t in fact how his plan worked. It didn’t accumulate a fund, but provided a guaranteed level of income which was increased with additional bonuses. I agree this should have been apparent to the adviser when advising Mr W.”

Mr W accepted if the plan was properly explained, he would still have been told to continue the plan as it contained valuable guarantees and only take an income, with the same advice given at review meetings.