Categories
life

Public Service Announcement: Aegon Pensions

Do you have a person pension with Aegon? If so, I suggest you ask them to double-check the statements they have been sending you, as they might well be incorrect. I’ve recently discovered that mine have been wrong to the tune of several thousand pounds for seven years.

This year I’ve been transferring all of my personal pensions to a SIPP at Hargreaves Lansdown. It has generally been a painless process. You fill in a form and sent it to HL, they contact your current pension provider and a week later the money is sitting in your HL account.

Of course, you’ll want to know how much is in your pension fund, so you know how much money to expect to be transferred. But your current provider will be sending you annual statements. As the stock market has been rising for a lot of the last twelve months, the amount you’ll get will almost certainly be a little more than the amount on your last statement.

But there will be two values on your statement. – the fund value (FV) and the transfer value (TV). FV is the amount your fund is worth if you leave it with the current provider. TV is the amount they’ll send to your new provider. Looking at all of my statements, FV and TV were the same amount. So all was well with the world.

I found that I had six personal pensions (I really have no idea why I had so many – it seems rather more than you’d need) and, over a period of a few weeks, I set the transfers going on all of them. Five of them worked fine – I got a little more money than I expected. The sixth was with Aegon.

One Friday afternoon I got a phone call from an adviser at HL. Aegon wouldn’t make the transfer unless I confirmed that I was aware of the current valuations. He read out the valuations that Aegon had given him. TV was about 20% smaller than FV. This meant that I’d lose about a fifth of my money if I transferred the fund. I asked him to put the transfer on hold until I could confirm this with Aegon.

Aegon’s customer support line is closed over the weekend, so I couldn’t speak to them until Monday. But I double-checked my statements. There was a different between FV and TV in 2007, but since 2008 every statement had shown the two values to be the same. And, naively, I assumed that my statements were accurate.

On Monday I called Aegon. Their customer support people tried to help but really all they could do was to pass my questions on and tell me to wait for ten days or so.

A couple of weeks later I got a reply which basically just said that my statements were wrong and that, yes, there was a 20% early exit fee on my plan. I wasn’t happy with that so I wrote back to them asking how their system could issue incorrect statements for seven years without anyone noticing.

Today I got a reply to that letter. Here’s what they say:

Statements are system generated reports which are issued annually. These are usually issued directly to Policyholders or Financial Advisers without being checked. It was only when you brought the error regarding values to our attention the the matter has been investigated and future automated statements have been inhibited.

So there you go. There was apparently a bug in Aegon’s system which went undetected for seven years, until I tried to transfer my pension fund away from them.

I’m going to continue to try and find out how I can get my money out of Aegon without losing a large chunk of it. Given that most of the industry doesn’t work the same way that they do, I suspect my best approach is to accuse them of mis-selling the policy in the first place.

But if you have been receiving statements from Aegon over the last seven years, I’d ask them to check the values if I was you. Let me know what you find out.

Categories
politics

Jungle Money

There’s been a lot of talk recently about what Nadine Dorries was paid for her appearances on I’m A Celebrity, Get Me Out Of Here and why she hasn’t declared that fee yet.

By following the trail laid down by Unity in this excellent blog post and listening carefully to what Dorries says in this interview with Andrew Neil (I expect that’ll be there for another week or so) it becomes pretty obvious what has happened.

She hasn’t received the money yet.

Of course, you wouldn’t usually expect to wait six months for payment for a media appearance, so what has happened?

Dorries has a service company called Averbrook and all of her media work is now undertaken by this company. Then Averbrook invoices media organisations for the work that Dorries does and the media companies pay the fees to Averbrook. The fees then sit in Averbrook’s bank account until needed.

At this point Dorries has received no money and therefore has no requirement to declare any income. In the Andrew Neil interview, she says “I have not personally benefited from going into the jungle”. She then explains that she has a company for her media work and although it isn’t made clear, it’s obvious that this company receives the money from this work.

Dorries goes on to say that when she benefits from that work, she will have to register the income. At some point in the future she will need to use this money and Averbrook will pay it to her. There are various ways for a director to take money out of a company. You might pay it as salary, you might pay it as dividends (if the director owns shares in the company) or, in extreme circumstances, you can close the company down and redistribute its assets. All of these will have varying tax implications and all of them will require Dorries to declare the income to parliament.

But here’s the interesting thing. The income that Dorries will receive from Averbrook will have no link back to its original source. The declaration will simply need to say “£X,000 dividend from Averbrook” or whatever is appropriate. There will be no way to say how much of the money comes from each individual source.

It’s a bit like money laundering. But, of course, this is all completely legal. Working through a service company is a really common way to manage tax affairs. It has tax benefits and (as we can see here) it has privacy benefits.

Of course, there’s a good argument that using a company like this goes against the spirit of the requirement for MPs to declare income. It would be hard to argue against that. But until the law is changed, you are very unlikely to see any MP stop using the system.

So what are the chances of the system changing? Rather slim I’d say. Why? Well because the people who would need to make the change are many of the people who are benefiting from this system.

But on this occasion, I’d have to say that Dorries isn’t the problem. She’s just taking advantage of a well-known system. And people aren’t asking her the right questions about it.