Scottish Widows could be hit with a compensation claim which could cost it up to £1bn, following accusations it gave negligent advice to around a hundred final salary pension schemes.
The claim relates to advice given in 1999/2000 by internal Scottish Widows actuaries to switch out of with profits guaranteed deferred annuity funds into the Scottish Widows Managed Fund. Independent consultancy Actuarial Review Company, which represents one affected scheme, estimates this decision lost schemes around £300m. However, the cost to Scottish Widows of full restitution (putting the schemes on the same guaranteed footing as before the switch) could create an extra liability of £1bn. The loss to schemes makes it impossible to keep pension promises to members without massive in...
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