Co-op Pension: Have I been treated fairly?

Fred_Bear_2

Sorry for the length of this post.
When I lost my job in 1989 I transferred my company pension contributions to a Co-op Option 32 Pension scheme. I have now reached retirement age.

On 28th Feb I received an offer, dated 26th Feb, of a lump sum of £8,313.16 and a monthly pension of £114.93. I accepted this offer and posted the acceptance forms back to the Co-op the same day after scanning the form into my computer.

On 26th Mar, having had no reply, I phoned the Co-op and they told me that things were progressing normally and that there was no need to worry.

On 3rd Apr they paid £7,952.38 into my bank account. I phoned to ask why this was less than the offer. He told me that I had returned my forms late. Because the forms were received on 26th Mar which was more than 30 days after the offer was made they were entitled to recalculate my pension??? I told him I had returned the forms on 28th February. He said this was impossible because I could not have received the forms by this date??? I told him I could prove I had the forms because my computer had dated the scan. (Of course I now realise that 26th Mar was less than 30 days after 26th Feb in any case.) He then admitted that they had in fact received the forms in plenty of time.

So would I now be paid the correct amount? No. Why? Because my 65th birthday was after 31st March so they were entitled to recalculate my pension. I referred him to the 'Policy Guarantee'. He said that did not guarantee the amount of my pension. He referred me to another clause which said that they were allowed to pay me less (or more!) than the amount they quoted in their offer. I hadn't noticed that clause. My fault. Game set and match.

Apart from all the nonsense I was told during my 30 minute telephone conversation, my complaint about the way I have been treated is this:

1. Why can they reduce their offer so soon after they have made it, and how am I supposed to compare it with other insurance companies' offers if they subsequently change it?
2. Surely if they do decide to change the offer they should ask me if I still want to accept it?
So the system is effectively that the Co-op offer me a figure which I can decide to accept or to transfer to another company. If I accept, they say nothing to me and proceed to pay me a reduced amount. How am I supposed to make an informed decision?

Is this the way pensions normally work, or do I have a just cause for complaint? I would appreciate advice from people who understand pensions please.

dunstonh

Because the forms were received on 26th Mar which was more than 30 days after the offer was made they were entitled to recalculate my pension???

Most annuity quotes are guaranteed for between 14-30 days. When the provider receives the application, that usually extends the guarantee period.

1. Why can they reduce their offer so soon after they have made it, and how am I supposed to compare it with other insurance companies' offers if they subsequently change it?

Depends on the reason for reduction. Whilst an annuity rate is guaranteed for 14-30 days, the fund value is still subject to daily fluctuations.

Have you been able to ascertain the reason for the reduction? A reduced tax free cash payment suggests fall in value as a change in annuity rate would only affect the annuity, not the lump sum. (caveat if there is GMP).

2. Surely if they do decide to change the offer they should ask me if I still want to accept it?

Many providers will query differences of 5% or more with you first. However, this is a choice and not required.

By not using an IFA, you bypass a number of the protections that a put in place to give you various risk warnings, key issues etc. By going direct, you take on the responsibility for knowing what you are doing. This doesnt let the provider off the hook totally but it does allow them to reject complaints in most areas unless it is a fault on their part.

Is this the way pensions normally work, or do I have a just cause for complaint?

Based on very limited information, if the difference is down to fund value then a complaint would fail. If the difference is not down to that then I would refer the complaint to the FOS. If you can show you got the forms back to them within the guarantee period then a recalculation should not have taken place.

Can you let us know what the new monthly income amount is?

Fred_Bear_2

Thanks for your help dunstonh. My new monthly pension is £113.96. I am just rushing out and will read your post carefully this evening when I get home. Re 30 day rule: They accept I got my forms back in time, so this does not apply and seem to be relying on the 'after 31st March' rule.

Fred

patanne

Surely they must have known your date of birth before making the offer or were their records incorrect?

atush

Sounds a bit fishy to me, get back to us with further developments.

But, given there is a provision with every annuity for payment for advice (used to be commission) that you perhaps paid anyway going direct, this goes to show that if buying an annuity you should always use an IFA.

Fred_Bear_2

patanne wrote: »

Surely they must have known your date of birth before making the offer or were their records incorrect?

Yes, they have known my date of birth for 23 years.

Fred_Bear_2

dunstonh wrote: »

If you can show you got the forms back to them within the guarantee period then a recalculation should not have taken place.

If you re-read my original post you will see that this was always a spurious reason. At first they claimed they had received my acceptance forms on 26th Mar (i.e. within 28 days) which was actually the date I had chased them by telephone. Later they admitted that they had in fact received the forms much earlier, although no exact date was given. So there never was any question that I had exceeded this '30 day rule'.
Then when I had shown them that they were wrong, they then changed the reason to the 'birthday after 31st Mar rule'. As patanne said they obviously knew about my date of birth when they made their offer.