Pensioners owed thousands in Prudential IT meltdown

An IT meltdown at one of Britain’s biggest pension companies has left savers locked out of their savings for months on end.

Prudential customers have been forced to find another source of income as retirement payments failed to come through for most of the year. The pensions giant, which oversees over £51bn in retirement savings, has suffered a systems meltdown that has blocked some bank transfers and left crucial pension statements out of date.

In November 2020, Prudential shifted its five million customers to a new IT system as part of a software upgrade. However, the switch has caused severe delays in customer service response times with staff struggling to process paperwork, a spokesman at the group admitted.

He said: “We have been training our team on the new system, which has taken longer than we expected as it was impacted by the pandemic and, particularly, the most recent national lockdown.”

The company refused to say how many customers were affected by the blunder. The delays have come at a time when many cash-strapped workers have been forced into an early retirement, with 1.3 million workers stopping work sooner than planned because of the pandemic.

Hundreds of people have lodged complaints against Prudential with the Financial Ombudsman Service. There was a 50pc increase in pension complaints against the provider during the second half of 2020, with 302 formal cases being launched.

Steve Weston, 60, from North Wales, retired in February but has not been able to receive any of his pension.

Mr Weston, who is now owed £6,860 in missed pension payments, has had to use up his savings to stay afloat.

He said: “I’m out of pocket because of this. It is an appalling situation affecting many people and it is scandalous that it has been allowed to carry on for so long. I had to leave work because of ill health and I could just about afford to retire but then received nothing.”

Mr Weston said he was promised compensation of £300 for the trouble in mid-March, but even that money failed to come through.

Savers whose company pension scheme is administered by Prudential have been the most affected. The company runs “additional voluntary contributions” on behalf of many employers. These are extra payments that employees can make to boost the size of their pension.

Mr Weston had been paying AVCs and was told he could not start to receive his pension cash until his contribution records were fully up to date. He continued to make AVCs until he retired in February, however his recorded statements are months out of date because of the IT meltdown, he said.

Prudential has said there will be no “financial detriment” to a member’s claim or investment as a result of the delays. A spokesman at the company said: “We apologise to any customer who has not received the service they would expect from us. We are doing everything we can to resolve the situation as soon as possible.”

However, Prudential has not confirmed whether this will include any extra taxes that have been incurred. Many savers are set to face higher tax bills as a direct consequence, with many missing out on tax breaks before the end of the financial year in April.

The rate at which you start paying income tax, known as the “personal allowance”, is £ 12,500. Most retirees plan their withdrawals around the tax year to stay below certain tax rate thresholds and minimise their costs. However, Prudential’s delays could have derailed these plans.