Scottish Widows denies unfair play in GAR policies
UK – UK insurer, Scottish Widows, has issued a statement stressing that it does not operate different bonus procedures for pension policies with guaranteed annuity rates. The announcement follows complaints from a handful of its policyholders.
In its statement made today, Scottish Widows said that: "all guarantees under guaranteed annuity policies are being met in full.’
The Financial Ombudsman has received complaints from several of Scottish Widow’s policyholders who maintain that payments have been less than those made to investors who do not have guaranteed annuities.
Says Scottish Widows: "this belief may have arisen because the company increased the price of pensions benefits in February 1999 to reflect changing financial conditions. As a consequence, the bonuses on these policies are higher – irrespective of whether or not they have guaranteed annuities."
Scottish Widows has around 170,000 guaranteed annuity rate (GAR) policyholders, many of which are concerned that the differential bonus strategy introduced this year is devaluing their annuity guarantee. Scottish Widows announced a change to its procedures for the GAR policies at the end of January this year.
The Financial Ombudsman is believed to be referring its Scottish Widows cases to the Financial Services Authority, although the FSA would not confirm this.
This incident has echoes of the Equitable Life case which went to the House of Lords over its move to pay lower bonus rates on pension policies with guaranteed annuity rates.