Aegon has been criticised by the Financial Ombudsman Service for a series of “significant errors” relating to a pension sharing order.
A couple, referred to as Mr and Mrs C, were getting divorced in early 2015.
Mrs C was in her early-60s at the time and as part of the divorce settlement, Mr C agreed to give his soon to be ex-wife 50 per cent of his personal pension, held with Aegon.
Mrs C’s solicitors were made aware her share was likely to be worth about £47,500 in gross pension value and she appointed a financial adviser to help her sort out the pension money she would be receiving.
She would have a new pension plan in her own name, also with Aegon.
However in early September 2015, Aegon transferred in error 60 per cent of Mr C’s plan to Mrs C’s new one instead of the 50 per cent that was agreed.
This amounted to about £57,300. Mrs C took the tax free cash from this shortly after of about £14,350.
Later in September 2015, Aegon made a second error when it transferred the other 40 per cent of Mr C’s plan - about £41,500 - to Mrs C.
Mrs C’s adviser questioned the second transfer but was told by Aegon it was correct.
In fact Aegon then chased the adviser about accepting the second amount on three separate occasions in September.
After the second payment was made, Mrs C paid over £5,000 in rent, paid to furnish her property, gifted her sons over £10,000, and paid off a number of bills.
By May 2016 she had spent the majority of the money she had withdrawn as tax free cash and from drawdown.
The provider failed to spot the error until January 2016.
Aegon requested Mrs C repay everything she was not originally entitled to.
Mrs C’s adviser approached his Aegon business development manager about this.
According to the Financial Ombudsman Service, the BDM “didn’t get the matter looked into as he should have.”
This employee then left Aegon in April 2016 and told Mrs C’s adviser to raise the matter as a complaint.
It was only at this point that Mrs C was made aware by her adviser of the overpayment.
By this time Mrs C only had left a small amount of what she had taken as tax free cash and income.
Approximately £42,000 remains in the pension which Mrs C hasn’t drawn down as yet.
Aegon has frozen the pension while this complaint is ongoing meaning Mrs C can’t drawdown any further funds.
In a final decision, ombudsman Benjamin Taylor said: “This is an extremely sad situation and Aegon has made a number of significant errors.
“Mrs C, having been through the difficult time of a divorce and having to find a new home and start afresh with little financial provision, has made some understandable decisions with the money she received from Aegon.