Wealth management firm Hamnett Wealth has been forced to completely overhaul a client’s retirement plans as a result of an insurer error in calculating the value of his pension.
The client, Mr P J, was contacted by insurer Aon Hewitt on 11 November 2015, when he received documentation relating to an old pension.
In this documentation, seen by FTAdviser, the guaranteed statement of cash equivalent transfer value was £184,803. However, in a document sent this year on 31 March to Mr P J, the value had been reduced by £50,000 to £134,688.
In email correspondence between the client’s adviser, Jonathan Rowley, director and IFA at Hamnett Wealth, it transpired Aon Hewitt made an administrative mistake which led the original overvaluation, and subsequent downgrade.
The email stated the original transfer value quoted was “incorrect as it was based on the wrong rate of revaluation and therefore we are unable to honour this transfer value quotation”.
As a result, Hamnett Wealth has had to scale down plans Mr P J had hoped to enjoy during his retirement.
Mr Rowley said this was distressing for his client, who is 60 years old and would have taken a 25 per cent tax free cash lump sum had the value been at £184,803 as originally suggested.
The client had dreams of paying off his mortgage and of his wife being able to work part time, Mr Rowley said.
Speaking to FTAdviser, the adviser added: “Pension companies don’t realise the impact it has on ordinary people.
“I can’t believe how incompetent they are. It’s worrying that they are making such large errors.”
A spokesperson for Aon Hewitt responded that they are aware of Mr P J’s situation. “We are investigating the matter further and will keep Mr P J informed as we progress with our enquiries.”