‘Aviva denied my disabled sister the pension our brother left for her’
Dear Katie,
Very sadly my elder brother died in a hospice in September, and as he had never married or had children, he made me the executor of his will.
I discovered that he had a pension, which was held by Friends Life, paying him a guaranteed income for life. As part of the policy he had arranged to receive lower payments for himself while he was alive, in return for an annuity which would be paid upon his death for my disabled sister, who now lives in a care home.
I ask for your help as Friends Life, which has now become a part of Aviva, is refusing to honour this so-called “dual life” annuity, meaning my sister will get nothing.
It means my brother has accepted years of greatly reduced pension income for nothing in return.
He had nominated our sister as a “dependant” relative on the application form, which according to the associated policy documentation, was perfectly acceptable, as it states that the beneficiary can be a dependant relative. It appears that this was then approved by Friends Life and the policy commenced. However, my sister has been rejected as an eligible beneficiary without a proper explanation.
Denying her the annuity after my brother has died is downright pernicious and wrong. He would be absolutely heartbroken at the decision.
I feel it amounts to defrauding a vulnerable person in care, as well as the Government and taxpayers, who are funding her place in the nursing home. The annuity was worth £1,458 a year and she is only 61 years old, so if she lives another 20 years it would represent a loss of nearly £30,000.
– PO, via email
Dear PO,
I was really sorry to hear about the loss of your dear brother. You say that you had both supported your widowed mother and your sister for many years, as your sister was born with significant disabilities and struggled to care for herself.
This was long before she developed dementia and was eventually resigned to a care home.
When your brother took his pension and named your sister as the beneficiary, this was obviously a key consideration. She had depended on him previously and he must have felt she might need extra financial support if he died before her.
The form your brother filled in stated: “If you choose you can provide a pension for your husband, wife, civil partner or dependents [sic] when you die”.
Aviva hasn’t said why it didn’t want to pay your sister the pension, but I suspect it was because originally, when the policy was set up by Friends Life, it wasn’t clear about what it meant by dependant. I wonder if it intended this to mean children only, rather than siblings, or anyone else whom pension scheme members feel depend on them for support.
However, according to Gov.uk, a “dependant” could be a “spouse, partner, child, grandchild, parent, or someone who depends on you for care”, which of course could include siblings.
Under rules set by the City watchdog, pension firms are obliged to make their terms and conditions crystal clear with no room for interpretation. So, if this was the reason why she was denied the pension then Aviva was absolutely in the wrong because the fault lay with Friends Life.
Happily, when I asked Aviva to review the case it quickly agreed it had got this one wrong, although it has not yet explained its original decision. It is now in the process of backdating your sister’s pension and paying it directly to the care home, which manages her affairs.
It has also offered you some compensation for the stress caused by its error, but you have said you would prefer to donate this to the care home to spend on a Christmas treat for staff and residents. You’ve also made an additional donation to thank me for my help in arranging for the pension to be paid, which is also a heartwarming gesture.
An Aviva spokesman said: “We are very sorry for the upset caused to Mr O’s family over this issue. We have reviewed this case, and we are pleased to confirm that we will be paying this annuity to Mr O’s sister.
“In recognition of the distress and inconvenience caused we will also be paying an additional sum to the family in compensation.”