Pensioners gulled by system error
Pension provider Aegon has revealed that thousands of retired people
may have a poorer future because of a company accounting error.
It
says a system problem means it failed to deduct tax-free lump sums from
the value of Retirement Control pensions, meaning many savers may have
25% less funds than they expected.
The plans are based on income
drawdown, an alternative to buying an annuity on retirement. They allow
people to gradually withdraw income until aged 75, when the balance is
then used to buy an annuity.
The accounting problem may affect
7,000 savers, many of whom may have withdrawn more money than they
should, leaving them with less than they thought to fund the latter
years of their retirement.
The company says it cannot ignore the
error because the funds are linked to its unitised with-profits fund,
meaning that people with the overvalued pensions are taking more than
their fair share of the fund's assets.
Says a spokesman: "As we
do not believe there has been any actual financial loss, there may be
no grounds for compensation. We will review any complaints on a case by
case basis."