A pension provider’s mistake left a grieving Northamptonshire family facing a demand to repay more than £25,000 within 21 days, after it paid the wrong beneficiaries based on outdated paperwork.
When S.S.’s father died last year, he left a pension pot worth nearly £130,000 with Aegon.
The family received the money a few months later — but the split didn’t match his wishes.
His mother received 40 per cent of the pot, his uncle the same share, and S.S. got 20 per cent. The father had told his family the opposite arrangement: the uncle and S.S. were each meant to get the larger share, with the mother receiving the smaller portion. His parents were separated but still lived together and remained close.
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The family spent months arguing with the firm. Aegon insisted the payments were correct based on the documents it held.
That’s when the letter arrived.
Aegon demanded S.S.’s mother repay £25,933 within 21 days, threatening recovery action if she didn’t.
“This was obviously hugely stressful for the grieving family, as my mother is in poor health,” S.S. said.
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How an archived form caused the mix-up
The father had done the responsible thing: he made a Death Benefit Nomination, telling his pension provider how to distribute the money. He also discussed his wishes with his family while alive — a step financial planners strongly recommend.
When the firm processed the claim in October, it used an older nomination form. The more recent one, filed later by the father, had been archived during a computer system upgrade and was invisible to the claims team.
S.S. received half the amount he should have gotten at the intended share. His mother got the larger payment when she was paid in early November.
Transferring the money privately wasn’t straightforward. If S.S.’s mother simply gave him the extra portion, it could count as a gift for inheritance tax purposes. If she died within seven years, that money could be taxed at 40 per cent. She had also put her payment into a fixed-term savings account, meaning she’d face a penalty for early withdrawal.
