Dear Mr Nichols
Thank you for your email below.
I am pleased to answer your points as follows:
Member communication
I am aware of the requirements you have referred to from the TPAS website. We will be making an announcement to all members of the scheme in the next 10 days or so. This will cover all the required content.
Regulator Report
We are in the process of preparing the first wind-up report to the Regulator and this will be submitted shortly.
Other questions
In terms of the numbered paragraphs, rather than address each point individually, I am setting out some of the key points I made in a conversation with Steve Riley last week which I imagine you may be aware of already as these address all the issues you raise:
1. My view was that this was going to be a quick and easy wind-up exercise. Factors influencing my view included the following: (a) there had only ever been one company participating in the scheme; (b) the scheme was contracted-in to the state second pension (formerly known as SERPS); (c) L&G had always been the administrator of the scheme. There was no sign of the normal wind-up delaying factors such as having to agree contracted-out benefits with the National Insurance Contributions Office (which is normally the single biggest piece of work involved in a scheme wind-up). I made the tactical decision that L&G should continue in post as administrators of the scheme through the wind-up (why would I move from the people who knew the scheme inside out?).
2. We promptly moved to secure members' benefits with Aegon. This was concluded in January 2009. The annuity rate for the contract was fixed at that date. We also secured and documented a formal guarantee from the parent company (of which you already have a copy).
3. Members therefore do not need to worry about the recent volatility in equity markets, for example. Their benefits are to be secured / paid in full.
4. In the event, the service provided by L&G has been lamentable. For a long while they did nothing. When they did eventually apply resource to the scheme, the work was very often late and / or wrong.
5. Aegon have set 3 "rebalancing" slots for the scheme so far this year (this is the process by which Aegon will accurately calculate the final premium required to secure members' benefits). L&G failed to apply the necessary resource to come anywhere close to meeting the deadlines or requirements to enable us to proceed on the first two occasions.
6. We have escalated the scheme within L&G and received commitments about service going forward in particular working towards the third "slot". We have continued to receive poor service. In particular, Aegon have said the data L&G have been supplying is unfit for purpose. The data has improved but even at this very late stage, Aegon have raised significant concerns over the data and their ability to price the contract (hence our request for details about certain members' spouses of Monday - many thanks for your assistance in this regard).
7. The decision to retain L&G as scheme administrators was right at the time. In the event, they have done a poor job. I could appoint alternative administrators to do this work but that, in itself, would take time and cost and then the new administrators would have to start from scratch. My decision has been to retain L&G and endure the frustrations that decision has brought with it.
8. I have been faced with a decision about whether to finalise the buy-out with Aegon by reference to data which is unclear, incomplete in certain respects and inconsistent or to allow more time for the data to be perfected. My primary duty as trustee is to ensure that the members get the right benefits at the right time. Uncertain and incomplete data means that the benefits may not be right or that the price will be unnecessarily and avoidably high.
9. Having considered the position at length and consulted with the parent company's advisers, my decision therefore is that L&G should have more time to get the data (and hence members' benefits) right. This means that there will be a further delay in issuing members with a policy in their own name but, as I have said many times before, this does not mean that members lose financially.
We have yet to hear from Aegon as to the next available "slot" but, now that it appears that L&G have broken the back of the data work, I am hopeful that we will be able to conclude the process definitively at the 4th attempt. I will be arranging a further meeting with L&G to secure all necessary resource and to discuss the position generally.
I hope that this frank explanation of the issues we are facing is of assistance, even if it does not bring matters to the swift conclusion that you (and other members) hope for.
Yours sincerely.
Philip W. Sutton
From all of this I gather we are still no nearer a settlement, L&G are still a crap company to deal with and Hammonds LLP still appear to carry no weight in the negotiations. All in all, we seem to have been sold a pup of a pension scheme. I will continue to press for action, but don't hold your breath for a resolution any time soon.
