Man Pays £82,000 for Annuity, Then Insurer Claims It Has No Record of Him

A Standard Life customer, identified as J.S. from Gloucestershire, has reported a distressing experience where the insurer claimed no record of his existence or annuity application despite having received £82,000 of his pension funds.

The 67-year-old retiree had planned to use the money to purchase an annuity as the final step in his retirement planning. In early June, he accepted a quote from Standard Life for an annuity that would provide an income of £5,787 annually for 15 years, with a provision for his wife to receive 50% of that sum annually if he died during the term. His investments were transferred to cash by his pension provider, ready for the transfer to Standard Life.

His annuity application was submitted on June 9 through his financial adviser. By July 31, Standard Life confirmed receipt of the funds and indicated the annuity would become active on August 10. However, on August 11, J.S. was informed that the initial quote was outdated due to changing rates. A revised quote was issued for £80,196, offering an income of £5,812, which he immediately accepted with a new activation date of August 18.

When he heard nothing by August 31, J.S. and his financial adviser filed a formal complaint. Subsequently, multiple Standard Life teams informed him that they had no record of him or his application, despite the £80,000 having been transferred.

Helen Crane, This is Money's consumer champion, explained that an annuity involves exchanging a pension pot, investments, or savings for a guaranteed income for a set period. While purchasing annuities was once compulsory for defined contribution pension holders, this requirement was removed in 2014, giving individuals more flexibility. Annuities saw a decline in popularity during periods of low interest rates but have recently experienced a resurgence due to factors such as inheritance tax concerns and improved returns linked to higher gilt yields.

Standard Life's internal data indicates a fourfold increase in annuity quotes for individuals over 75 in the past two years. J.S. contacted This is Money in early September, approximately five weeks after Standard Life confirmed receiving his funds. He expressed distress over being told by several staff members that the company had no record of his money or identity. The uncertainty was reportedly impacting his health, and he was also undergoing tests for a serious medical condition.

Standard Life confirmed that the cash was received in July and held securely. The company attributed the delays primarily to a change in J.S.'s financial adviser, which necessitated vetting checks that took longer than expected. It also appears that Standard Life failed to update the adviser's details on some of its systems. This led to incorrect information being given to J.S.'s advisers when they sought updates, stating they lacked the authority to discuss the case. A letter explaining this was sent to the adviser and a copy to J.S.

Despite the eventual resolution, J.S. expressed dissatisfaction with the lack of direct communication from Standard Life, including no personal apology or a detailed timeline of events. He also noted that his formal complaints had not been answered, and no explanation was provided on how such errors would be prevented in the future. He is considering escalating his complaint to the Financial Ombudsman Service.

To compensate for the delays, Standard Life provided J.S. with £620.98 to cover annuity payments from July 1 to August 9, along with £9.69 in interest and £350 in compensation, totaling £980.67. He also received £968.62 to cover payments due on August 9 and September 9.

A Standard Life spokesman stated, "We are sorry for the delays and poor communication J.S. experienced while his annuity was being set up. We have upheld his complaint, offered compensation and taken steps to ensure he was not financially disadvantaged by the delays he experienced. The annuity was backdated to his requested set up date and is now in payment. We are reviewing the issues identified in this case to help prevent similar problems happening in future."

J.S. has now received the backdated payments and compensation, ensuring he is no longer financially disadvantaged by the administrative issues.