Pru repays customers £4m for undervalued pensions

INSURANCE giant Prudential said yesterday it would repay about £4m in total to 39,000 customers after it admitted making errors in valuing their pension funds.

The Pru failed to return tax credits to unit-linked pensions funds held with Scottish Amicable, which transferred to Prudential in 2008, leaving some customers who partly sold or transferred their funds out of pocket.

Prudential has written to affected customers confirming it will pay back the amount needed to return them to the position had the credit been paid.

Most will receive less than £100, with about 9,000 to receive up to £1,000 and 100 to get £2,000 or more.

The oversight was exposed in an internal audit. Tax deducted from investment income earned by the funds should have been recovered against Prudential Assurance’s tax liability. “We found there was some inconsistency in the way these tax ‘credits’ were paid,” the Pru said. “For some of our legacy Scottish Amicable funds...the tax refund was not paid, whereas for our other funds it was.”

It altered the treatment of the credits in June 2008 to price all funds equally. This payback corrects the value of funds that were undervalued when transferred, switched or partially surrendered by customers between June 2004 and December 2008.