Standard Life Accused of Losing £82,000 Annuity Payment

A customer has raised concerns after Standard Life reportedly could not locate a £82,000 annuity payment, despite confirming receipt of the funds and setting an activation date. The client, identified as J.S. from Gloucestershire, decided to use his investments to purchase an annuity, a financial product that provides a guaranteed income for a set period.

Initially, J.S. accepted a quote for £80,191 for a 15-year income of £5,787, with a provision for his wife to receive half that amount annually if he died during the annuity term. His investments were converted to cash by his pension provider and were ready for transfer to Standard Life. He submitted the annuity application through his financial adviser on June 9.

By July 31, Standard Life confirmed it had received the money, stating the annuity would become active on August 10. However, the following day, J.S. was informed that the initial quote was outdated due to rate changes. He accepted a revised quote for £80,196, which would provide an income of £5,812, with a new activation date of August 18.

When J.S. had not heard back by August 31, he and his financial adviser filed a formal complaint. He was subsequently informed by multiple Standard Life departments that there was no record of him or his annuity application, despite the £80,000 being transferred. J.S., aged 67, expressed anxiety about the situation, as this was intended to be the final component of his retirement planning.

Helen Crane, a consumer champion for This is Money, investigated the matter. An annuity involves exchanging a pension pot, investments, or savings for a guaranteed regular income. While purchasing an annuity was once mandatory for those with defined contribution pensions, this requirement was removed in 2014, allowing individuals more flexibility in managing their retirement funds. Annuities had fallen out of favor during periods of low interest rates, but a recent increase in gilt yields and concerns over inheritance tax on pension pots have led to a resurgence in interest. Standard Life's own figures indicate a quadrupling in the proportion of individuals over 75 seeking annuity quotes in the past two years.

J.S. contacted the consumer champion in early September, approximately five weeks after Standard Life reported receiving his funds. He described distress over being told by Standard Life staff that the company had no record of him or the money. He also mentioned experiencing stress that affected his health and that of his wife, compounded by tests for a serious medical condition.

Standard Life confirmed receipt of the cash in July, stating it was held securely. The company attributed delays in processing the application primarily to changes in the financial adviser. Aviva flagged this change early in the process, prompting Standard Life to conduct vetting checks that reportedly took longer than expected. It also appeared that Standard Life failed to update the advisers' details on some systems, leading to incorrect assertions that the firm lacked the authority to speak with them on J.S.'s behalf. A letter explaining this was sent to the financial adviser and a copy to J.S.

J.S. remained dissatisfied that Standard Life had not contacted him directly to apologize or provide a detailed timeline, nor had his formal complaints received a response or an explanation of how such errors would be prevented. He was advised to consider a complaint to the Financial Ombudsman Service.

To address the financial impact of the delay, Standard Life calculated the annuity payments J.S. would have received between July 1 and August 9, paying him £620.98, 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 spokesperson for Standard Life 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."

With the financial discrepancies resolved and the annuity now in payment, J.S. is able to proceed with his retirement plans.