Friends Life Falling Foul of Age Discrimination Laws?

Won’t Transfer or Can’t Transfer?

One of our clients has a pension policy with Friends Life and wishes to purchase an annuity. Our client’s circumstances qualify for an impaired life annuity and this provides an uplift in income of about 30% compared to the annuity rate offered by Friends Life and is also somewhat higher than other annuity providers‘ quotes. It all seems straightforward but there is a problem…

Friends Life are refusing to transfer the pension to the annuity provider because policy wording within this particular pension dictates that an annuity must be purchased before age 75; our client has passed their 75th birthday. Prior to April 2011 the pension wording would have to be accepted since legislation required that annuities had to be purchased by an annuitants 75th birthday, this requirement has now been removed by the Government – did they see it as age discriminatory? Friends Life will not follow the new rules, insisting that it will only transfer the benefits if the receiving scheme can backdate the annuity to the annuitant’s 75th birthday, which is an option not available through the annuity provider offering the highest income.

What are the options now available?

  • Incur the cost of researching the annuity market again, this time for annuity providers that can provide backdated benefits
  • Purchase the annuity from Friends Life

Either way, the annuity income will be lower since we have already identified the highest income provider but they cannot backdate. Our client will be disadvantaged.

Age Discrimination

It is against the law to discriminate against someone on the grounds of age alone. Friends Life are effectively forcing customers that hold these pension contracts to buy an annuity by age 75 even though the law states there is no requirement to do so. Furthermore, they are reducing consumer choice by narrowing the market to only those annuity providers that can backdate to age 75 – should there be no such annuity providers then they have forced the annuitant to buy their own [Friends Life] expensive annuity; the Open Market Option effectively becoming worthless – I feel there may be argument for being charged for something that cannot be used [Open Market Option], isn’t this the basis for many PPI miss-sold contracts?

Annuities-Online is taking a stance against Friends Life and will push for them to change the policy wording within their pension contract and allow the transfer to take place, this is in the best interest of our client. We hope Friends Life will see the error of their ways and remove this requirement from all of their pension contracts at the earliest opportunity thus avoiding any further cases of discrimination.

We’ll update this article when we have received Friends Life’s response.

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