ASK TONY: First Aviva messes up my pension, then says I should carry on working until I'm 65!
I worked for London Transport's computer department. When it was taken over by a private company in 1987, I was given the option of leaving my pension where it was or transferring it out.
The latter promised me a guaranteed minimum pension that would be at least equal to the one I would have received from London Transport.
I paid a premium of £5,772.83 to Norwich Union, which later became Aviva.
In the past two years, there has been a catalogue of errors relating to my policy, which I suspect have cost me thousands of pounds.
I am regularly told the transfer value is zero. Aviva has changed documentation to show me retiring at 65.
And the complaints team have never called me back. During April and May 2016, my pension value appeared to decrease.
Mrs J. C., Berkshire.
Errors: Aviva has been making one readers life a misery by messing up her pension policy
You spent years trying to sort out this mess before writing to me in May.
I have been communicating with Aviva since then — but, in August, you, not surprisingly, ran out of patience and brought in the Financial Ombudsman.
The Ombudsman confirmed that Aviva's approach to resolving the issue was correct, but doubled the amount of compensation to £500.
Let's look at what's happened.
The documentation said your guaranteed minimum pension (GMP) of £299 per year would increase by 8.5 pc for each completed year from April 6, 1988, until your retirement, aged 60, in March 2013.
To bust some jargon, GMP refers to a link with state top-up pensions. London Transport's pension took you out of the old state top-up pension, Serps, so your private pension must at least equal what this would have paid.
Your woes began when Aviva erroneously changed your retirement age from 60 to 65. As a result, you did not receive your retirement information or choices.
After I intervened, Aviva, on June 28, issued a proper quotation for the pension backdated to your 60th birthday. Three weeks later, on July 18, it provided a further quotation showing what you could instead receive if you waited until your 65th birthday.
But you told me you were unhappy because you still had not been told how much compensatory interest you would receive, other than that it would be paid at 8 pc — so you felt it was impossible to make an informed decision. I agree.
How can you compare the offers if you have not been provided with all the figures?
I pushed Aviva very hard and, finally, we have them.
If you choose to backdate your pension to March 29, 2013, you will receive 43 months' annuity payment at £152.29 per month, plus £723.23 interest. That makes £7,271.70.
You would also receive £778.65 tax-free cash, plus £174.23 interest. So the total back payment would be £8,224.58. Then you would continue to receive £152.29 a month, or £1,827 a year, for life.
These figures assume that you are a basic-rate taxpayer and they are approximate: they will change depending on when you actually take the pension.
If you choose not to backdate, but instead take it from today, you would receive £2,875.08 a year, or £239.59 per month, before tax. There would be no tax-free cash because the fund is not big enough to provide any.
You'd need to wait for around eight-and-a-half years before the total provided by this option starts to work out as better value than the backdated deal.
But don't forget to factor in any tax and potential investment earnings. If you wait until you're 65 to take the pension, you are likely to receive about £3,131.96 per year.
These all include a spouse's pension if your husband were to outlive you.
I was also concerned that receiving your back pension as a lump sum could adversely affect your tax position. I put this to Aviva, and it has agreed to cover any extra tax liabilities caused by its error.
Retiring soon and need advice? Find an independent financial advi
YOU HAVE YOUR SAY - MAKING YOUR MONEY GO FURTHER
Every week, Money Mail receives hundreds of your letters and emails about our stories. Here's what you had to say about our ultimate guide to making your money go further...
Making your own packed lunch and avoiding buying snacks during the day helps to save a fortune.
I've been doing it for the past 20 years. You should also buy food at low-budget stores, rather than the bigger supermarkets.
C. B., Stevenage, Herts.
The best way to save loads of money is to pay off your mortgage as quickly as possible — make it a priority over any other spending. It'll save you thousands.
J. M., Cambridge.
I have been known to skulk around the reduced section of my local supermarket at around 7pm. I buy discounted meat and just pop it in the freezer. I save quite a bit this way.
S. H., Sussex.
My favourite tip is to use bath foam instead of shower gel. The only difference is that bath foam is runnier, but it's around a third of the price of shower gel and gets you just as clean.
F. M., Plymouth.
If you find it hard to increase your income, try reducing your waste instead. I'm not talking about 'going green' as such — it's more a matter of looking after the folding green stuff.
W. R., Chatham, Kent.
I always check both Amazon and eBay to get cheaper deals.
F. D., Scotland.
Rather than continuing to pay into a pension, I started putting money into a stocks and shares Isa. It's tax-free when you take it out, as opposed to when you put it in, as with a pension.
R. M., London.
Never ring the phone numbers written on letters from your insurer. Instead, look online for the free phone number and use that. Why pay 5p or more a minute just to be put on hold for an hour?
E. H., Essex.
When hiring a car, take out an excess policy with a specialist insurer — don't buy the car hire company's excess insurance. We did this and paid £2.50 a day instead of more than £20 a day.
T. N., Leeds.
It's really only worth haggling on big or medium-ticket items — on smaller-ticket items, it's just for the fun of it. Beware of taking your better half when haggling, though — especially if they have their heart set on something.
C. M., Reading.
Always eat before you do the food shop!
W. W., Guildford, Surrey.
In August 2015, I moved home and transferred my dual fuel account to my new property.
Scottish Power said my direct debit would be £69.41 a month.
In January, it dropped to £17.16, and I received a call asking why I had transferred my gas to British Gas. I had not, and said I wished to remain with Scottish Power.
In February, my direct debit went through for £17.61 for electricity, but nothing for gas.
Since then, I have provided readings and attempted to set up a new direct debit, all to no avail.
In July, once again the direct debit of £17.61 was taken. Scottish Power told me it was applying the direct debits to my bank account. I have sent it monthly statements to show that this is not so.
M. G., Manchester.
Well, here's a turn up for the books. Most people who write to me about power companies complain they have been overcharged.
But you are desperately trying to convince Scottish Power that you are its customer, you wish to remain its customer and you would dearly like it to take some money.
Scottish Power says your supply was taken over by another supplier in error.
Then, when it took back your supply, it inadvertently recorded the incorrect meter number against your gas account. This meant that your gas usage was not billed.
It has now put the situation right and set up a direct debit for both gas and electricity.
By way of apology, it has written off your balance of £72.20.
- Think you are paying too much for your energy? Check out This is Money's guide to the cheapest tariffs and how to switch
STRAIGHT TO THE POINT
My wife broke her ankle, so we had to cancel our holiday. I have been trying to get a refund for two return tickets from London St Pancras to Toulon, France, booked through Voyages-sncf, but we've been told they are non-refundable. This seems unfair.
M. O., Thames Ditton, Surrey.
You booked non-flexible tickets, which means you are not entitled to a refund — but you can change the date, subject to a fee.
As a gesture of goodwill after taking so long to resolve your complaint, Voyages-sncf says it will give you a 50 per cent refund — £291.50. It urges you to claim the rest from your travel insurer.
I bought a buy-to-let property with my husband. He is a higher-rate 40 per cent taxpayer, while I pay the basic 20 per cent rate.
At what rate will tax be charged on rental income from the property?
S. C., Manchester.
If the property is owned in both your names, you will have to split the tax-payable income between you, says Patrick Connolly of advice firm Chase de Vere.
Half the income will be taxed at 20 per cent and the remainder at 40 per cent.
This summer, I went to Majorca with my family. At the hotel, we were asked to pay €47 (around £40) in tax. What was it for?
P. B., Worcester.
On July 1, the government of the Balearic Islands introduced a 'sustainable tourism tax' to preserve the islands of Majorca, Menorca, Ibiza and Formentera.
In peak season — between May and October — each traveller has to shell out between 50 cents (around 43p) and €2 (£1.72) a day, depending on the quality of the hotel.
I read that RBS and NatWest are refunding interest and charges on student accounts dating back to 2002. I closed my account in 2007 and haven't heard anything. Am I entitled to a refund?
A. D., via email.
RBS and NatWest are contacting existing customers and using public databases to find former customers.
You say that the account was registered to your parents' address, which hasn't changed, so finding you shouldn't be a problem.
If you still haven't heard anything by November 1, call 03457 888 444 (customers in Scotland should call 03459 000 200).
I want to switch my current account to a different bank. Could you tell me how I do that?
C. F., Romford, Essex.
Apply for your current account with the new bank and give details of the one you want to move from.
Your new bank will let you know when the switch will complete, and all your direct debits and standing orders will be moved across.
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