After years of addressing consumers’ issues as The Times’ Troubleshooter, I am excited to announce the debut of my new column, Your Money Matters, which launches today. This column will be featured in both The Times and The Sunday Times, allowing me to tackle more of your financial concerns and advocate for increased refunds and compensation on your behalf.

When I reached the age of 70 two years ago, I contacted Scottish Widows regarding the possibility of starting a regular income from my pension. I sought clarity on my options; however, despite numerous calls and emails, I found it challenging to obtain precise answers. Unbeknownst to me, this was merely the beginning of a lengthy struggle.

At that point, my dissatisfaction with Scottish Widows led me to initiate a transfer of my pension, which was valued at approximately £64,000, to another provider for better management.

In March of the previous year, I submitted the necessary paperwork, yet it took six months for Scottish Widows to inform me that I had to seek financial advice first. I was perplexed as to why this requirement wasn’t communicated initially.

In December, my financial adviser sent a letter to confirm that I had received the necessary advice, but it took four months for Scottish Widows to acknowledge the documentation. Then in May, they requested another letter, citing that the prior one was outdated by three months.

This situation is utterly frustrating. I’ve invested so much time trying to resolve this issue, which has brought me considerable stress. My adviser shares my dismay and has lodged numerous complaints. Stuart, Hertfordshire

Katherine Denham’s Insights

Two years have elapsed since your initial inquiry about transferring your pension. You possess a “with-profits” pension, which manages investment returns by reserve withholding during prosperous periods to support the fund during downturns. While with-profits pensions can offer stability, they often come with high fees and complex structures, where the stated value may not always align with the actual investments.

Given that your pension exceeds £30,000 and includes a “safeguarded benefit,” Scottish Widows was legally required to ensure you sought financial advice before proceeding with the transfer. This type of safeguarded benefit affords you the chance to convert the pension into a guaranteed lifetime income. The amount you would receive depends on the timing of the conversion. For instance, converting at age 72 would yield £6,717 annually, compared to £5,791 at age 70.

Seeking advice was essential to understand the implications of your decision.

It should have been apparent to Scottish Widows that you required advice from the beginning, so I inquired why this wasn’t communicated initially, causing unnecessary delays. They acknowledged that clearer communication was warranted.

Nevertheless, your adviser faced continual obstacles in getting the transfer completed. You noted that every time new documents were submitted, Scottish Widows found another reason to stall the transfer. She dedicated an additional ten hours specifically to your case.

Scottish Widows stated that the required documents depended on your adviser’s prior submissions, explaining why they could not request all necessary paperwork upfront.

Scottish Widows expressed, “We apologize for the difficulties encountered during the transfer request and recognize that we could have done more to facilitate a smoother process. We will ensure that our customer does not incur any costs due to the delay.”

Ultimately, they credited you with an impressive £47,000 increase in your pension’s value, attributed to the intricate way they calculate with-profits pensions and a change in their methodology that occurred while you were still invested.

You have now received £110,844 along with £1,000 in compensation. In addition, Scottish Widows compensated your financial adviser £1,405 for the additional time spent on your behalf.

After enduring a challenging two-year saga, you expressed that you were still in disbelief about finally reclaiming your funds. You noted, “It was only when you intervened that Scottish Widows took my complaint seriously. This process has been long and frustrating, but your involvement sped things up, and I am sincerely grateful for your assistance.”

Issue with HMRC and £1,000 Payment

My son, Rory, who has lived in several countries since 2013 and currently resides in the US, has just six years of national insurance contributions recorded, all made prior to his relocation. I recommended he address some gaps in his record to ensure eligibility for a state pension in the future.

HM Revenue & Customs informed him that filling in the six missing years would cost £1,070 and provided a reference number for making the payment. In April, I sent a cheque on his behalf to cover this cost, which was cashed shortly after. However, Rory’s record has yet to be updated, and I have yet to receive a response from HMRC after inquiring about it.

Now, five months later, we are anxious that my payment has been misplaced. Bob, Stockport

Katherine Denham’s Response

Your decision to make voluntary contributions for your son is commendable. You’ve indicated that you are fortunate enough to afford this support for his future.

To be eligible for any state pension, one must have a minimum of ten full years of national insurance contributions, with 35 years needed for the full state pension.

You calculated that by supplementing your son’s record with six additional years and encouraging him to continue making contributions for the next 23 years, he would qualify for the full new state pension, currently valued at £221.20 per week. HMRC previously indicated that it would cost between £3.05 and £3.45 weekly to rectify his national insurance record.

Although most voluntary payments are processed within eight weeks, cases involving individuals living overseas usually take longer. This is due to HMRC’s need to adhere to specific requirements linked to the individual’s country of residence and employment, resulting in manual payment allocation rather than automated processing.

Even so, five months appears excessively protracted. Fortunately, after my inquiry, HMRC updated Rory’s record within a week and communicated to him an apology along with confirmation that his payments were now allocated. They also provided you with £75 in compensation.

£1,584,394 — the amount Katherine Denham has saved readers thus far in 2024