Pension customers paid back after charging error

Insurer Norwich Union is paying back a total of £11m (€13.47m) to pensions customers following a charging error, it emerged today.

Around 34,000 people who bought stakeholder pensions when they were first introduced in April 2001 will receive an average of £300 (€367) each back from the group.

The problem relates to charges for stakeholder pensions, which are capped by the Government at 1%.

But Norwich Union, which is part of insurance giant Aviva and one of the UK’s biggest stakeholder providers, found it had accidentally been charging people more than this since the products were first taken out.

The problem was uncovered during a review to ensure the group complied with City watchdog the Financial Services Authority’s Treating Customers Fairly regime.

A Norwich Union spokesman said: “We identified the problem ourselves and acted as soon as possible to refund customers. We have kept the FSA fully informed.”

People who have already retired will receive their £300 (€367) refund by cheque in the next few weeks. Those who have yet to draw their pension will have it increased to the level it would have been at if the error had not occurred.