Mystery of joint annuity (and a fearful husband)
W.W. writes: When I turned 60, I decided to invest my pension pot in an annuity. I chose a single life annuity paying about £5,500 a year, but my professional adviser said a joint life annuity would pay about the same and provide for my wife, so I signed. But he misled me and the joint annuity only offers about £4,200.
I complained to the Financial Ombudsman Service, which upheld my complaint, but more than a year later my annuity has still not been amended and I have not received a penny in compensation. THIS is one of the strangest problems I have ever investigated and it became more complicated as I dug deeper. Your adviser calculated your pension pot would yield £5,478 a year. The annuity would continue to be paid to your wife if you died before her.
Within a few days, the adviser’s firm realised a software glitch meant its computer had failed to distinguish between a single-life annuity and a joint life annuity.
The firm apologised, offering £250 as compensation for your disappointment and it says you agreed to take the joint annuity at the lower figure of £4,111. You were also still within the cancellation period so could have scrapped the deal altogether.
A few months later you complained to the Ombudsman, apparently expecting it to order your adviser to pay whatever it cost for the annuity to cover your wife’s lifetime as well as your own at a rate of £5,478 a year. The Ombudsman upheld the £250 compensation offer from the adviser, but added a bit of interest as well.
Crucially, the verdict gave you the right to unscramble the deal and choose the higher single-life annuity or stick with the lower rate to include your wife. But the Ombudsman’s decision included one important condition: ‘Mrs W must agree to the change.’ You signed an agreement, accepting this decision – but your wife did not. You demanded that the Ombudsman should somehow enforce its decision without your wife’s consent and you lodged a complaint with the Independent Assessor, the watchdog that stands behind the Ombudsman. It rejected your complaint.
You complained to Ombudsman chairman Sir Nicholas Montagu. He refused to reopen the case. You complained to your MP and he contacted Sir Nicholas, but that again led nowhere.
You then lodged a fresh complaint with your adviser as your annuity still had not been amended – because, of course, your wife had not agreed. The adviser rejected your complaint. You saw this as a fresh problem and made a new complaint to the Ombudsman. It was rejected.
As you see it, your wife should not be involved in your complaint. But the fact is that she was accidentally given the prospect of an eventual annuity, even though that offer really only existed on paper for a few days. The Ombudsman does not have the legal power to cancel this. That would take a court and a judge, or her agreement.
The Ombudsman has tried to explain this. You have told me you believe there is a conspiracy against you. You told your MP: ‘You have enough evidence to call Sir Nicholas to account for corruption, or whatever it is that enables him and the Ombudsman to rob me of my compensation and insult me.’
When I also tried to explain it, predictably perhaps, you turned on me. You had never wanted me to contact your adviser for his side of the story, you said, even though you gave your signed authority for this.
You told me: ‘How can you have led me to believe you would try to make the Ombudsman honour its promise to me, only to kick me in the teeth like this?’ You lodged a complaint against me, claiming I had been ‘rude’ and was ‘vilifying’ you.
One phrase of yours goes to the heart of the matter. You told me: ‘I do not want to remove my wife from the annuity arrangements without her consent. I am too scared of her for that.’
In short then, it is your view that someone else – your adviser, or perhaps the annuity firm or even the Ombudsman – should provide a pension for your wife because of a simple error that was corrected within a few days and for which compensation was paid. Sorry, but that just is not going to happen.