Aegon pays off client’s mortgage after pension blunder

Aegon has been ordered to pay a customer £10,500 in compensation after it told him he would receive double the pension income he was actually due.

The complainant, identified in the Pensions Ombudsman's notes, issued this week, as Mr Smith, received various letters from Aegon about his guaranteed minimum pension and other annuity benefits.

Some of these letters quoted him an income of around £2,500 whereas others quoted around £5,000.

Smith was told by Aegon in 1981, when he deferred his pension, that it would not grow or alter in any way after that point.

On receiving multiple quotes from Aegon's subsidiary Scottish Equitable via letter, Smith asked his IFA to confirm which was the true figure.

In October 2008, Scottish Equitable wrongly told Smith's IFA that £5,000 was the correct quote.

Acting on this quote, rather than that of £2,500, Smith sold his home, paid off some debts and took out a £20,000 interest-only mortgage on a new property with Northern Rock in January 2009.

Smith's actual income from his pension has left him struggling with mortgage repayments.

He complained to the ombudsman that he will not be able to pay off the mortgage and leave as much to his children as he had wanted.

The ombudsman, Tony King, ruled that Aegon's varying quotes for Smith's pension amounted to maladministration.

He said Smith would not have taken out the mortgage that he chose if he had been given the correct pension quote.

He said he could not order Aegon to pay him the £5,000 pension as Smith had never been entitled to this.

However, King ruled that Aegon should give Smith £10,500 to pay off the remaining balance of his mortgage in order to put him in the position he would have been in had he been given the correct quote.