Daily Insurance Industry News
Daily Insurance Industry News
Thursday 18th of October 2018
May 27, 2008

Scottish Widows accused of misadvising pension schemes

by Gill Montia

Story link: Scottish Widows accused of misadvising pension schemes

Scottish Widows has denied reports that advice it has given to a number of pension schemes could land it in the law courts.

Reports in the national press this weekend have repeated allegations that Scottish Widows has been negligent in its role advising around 100 company pension schemes, which are now considering claiming compensation of £1 billion.

It is alleged that in 1999 and 2000 the life insurer was instrumental in pension schemes removing guarantees that were designed to cover a rise in longevity.

At that time, the schemes were advised to switch investments into a Scottish Widows fund with a high exposure to shares.

In effect, this transferred the risk of pensioners living longer from Scottish Widows to the individual company pension schemes.

According to a Scottish Widows spokesperson, the insurer is only aware of one complaint relating to the guarantees and no High Court action is pending.

However, a director at Actuarial Review Company, an independent consultancy, has publicly stated that the firm is advising a number of pension funds in the matter and that information had been passed to the Pensions Regulator, Pensions Ombudsman, the Actuarial Profession (the professional body that monitors actuaries) and the Financial Services Authority.

It is understood that formal legal action is imminent.


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