AvivaMay 11 2018

Aviva has to compensate for pension valuation mistake

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Aviva has to compensate for pension valuation mistake

Aviva has been ordered to compensate a client who they gave incorrect estimated pension values to.

The client, known as Mr L, complained the pension value mistake led to him taking a pension with Aviva, and that had he been aware that the benefit values were less than in the forecasts, he would have made a different decision.

Mr L was provided with several estimated pension values in early 2017, the year in which his pension was due to vest but these were incorrect.

When his benefits were eventually paid they were less than Mr L expected because of an error in calculating the benefits made by Aviva.

Aviva had paid Mr L £300 in compensation for “trouble and upset”, but did not agree that it should pay the higher incorrect figures it has estimated he would get from his pension or provide any additional compensation.

A Financial Ombudsman Service adjudicator agreed, but said that the sum of £300 should be increased to £400 to reflect an error in Aviva’s final response letter to the complaint.

Neither Aviva nor Mr L agreed with these findings, so the complaint was passed to ombudsman David Bird.

In a final decision, Mr Bird said that the incorrect values were  “upsetting and frustrating” but were not guaranteed so he would not order Aviva to supply Mr L with the higher values it had estimated.

He also said that he did not think getting the right estimate rather than the incorrect figure given by Aviva ahead of vesting, which was about £2,000 more in tax-free cash and £450 a year more in annuity income than the actual amount that was received, would have led Mr L to make a different decision.

Mr Bird said: "I have not seen any persuasive reason why the lower figure would not have been acceptable.

"If Mr L had simply been given the lower correct figures (without being tarnished by his expectation of a higher figure) then I do not see a material reason why they would be deemed so deficient that a decision to postpone benefits would have been taken.

“Taking everything into account I believe the adjudicator’s suggestion of £400 is fair. I should make it clear that this is not awarded on the basis that the error with the final response letter warrants an increase of £100 but an overall review of the upset and inconvenience all the issues would have caused.”

A spokesman for Aviva said the provider does not comment on individual cases without the consent of the complainant.

The spokesman for Aviva said: "We always try to resolve any issues with our customers when they arise.

"Where that is not possible customers can contact the Financial Ombudsman Service and we adhere to the final decision made by the ombudsman."

rosie.murray-west@ft.com