My late husband set up a Scottish Equitable pension policy in my name that I only discovered in 2023 when I came across some paperwork at home. It showed we had applied to take tax-free cash in 2005 and the rest was to be used to buy an annuity. I had not received a penny so I contacted Scottish Equitable’s parent company Aegon to investigate.

In October 2023 Aegon got in touch and agreed to pay backdated annuities from 2005 with interest that amounted to several thousand pounds. It also looked like the tax-free lump sum had been paid into the wrong bank account back in 2005 as I had never received this money either.

Since Aegon promised to get this sorted in 2023 the complaints officer dealing with my case has left the company and I have not received any funds. My subsequent letters, emails and regular phone calls inquiring into the case have only been answered by a standard holding email or conversation saying that my complaint will be responded to within 20 days and the deadline just comes and goes.

I have contacted the Financial Ombudsman Service but it said it was unable to deal with the matter because Aegon has not gone more than two months without contacting me. Although no progress has been made, Aegon consistently sends a holding email just before the two-month deadline.

I am 84 and would like to resolve this matter, which has gone on for years.

Margaret, Pembrokeshire

Holly Thomas writes

I was truly shocked to read your letter. What a dreadful set of circumstances, not only to learn that an annuity you had paid for had never paid out an income but also that you had been stuck in a cycle of unhelpful letters that did not progress your case but also prevented you from seeking help from the ombudsman. You had no choice but to keep on waiting.

An annuity is a type of insurance policy that pays out a guaranteed income for a set period, or for life in your case.

Something had gone wrong with the policy bought with your pension savings so you were owed money to make up for all the payments you had missed out on since 2005 and the tax-free lump sum that never reached you. You also need the annuity to be sorted out so that you would get regular payments into the future.

Once I contacted Aegon it moved quickly to put these things in motion. I also asked Aegon to look into the ludicrous situation of your case not being dealt with for all this time.

While it held its hands up and admitted that it was completely at fault, it couldn’t explain how your complaint fell through the cracks, which I found rather inadequate.

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It seems that the annuity had never been set up — something that was never picked up by anyone at Scottish Equitable at the time. Looking back, you said you don’t really remember the pension being arranged because your husband had always taken care of the finances for you both. You said it was him that would have set the modest pot of money aside. Sadly a few years later he became ill and then died in 2012. During this time you never discussed this pension.

Aegon calculated that you were entitled to backdated payments of £8,407.19 — £6,092.33 after tax — plus interest of £1,430.98. Aegon’s records show that a tax-free lump sum of £2,267.53 was paid in March 2005 into a bank account with the same sort code as yours but a different account number — not one you recognise. I spoke to Aegon about this too, and it has agreed to pay you the sum plus interest, totalling £3,290.45.

Then the annuity that you had never had needed to be set up — Aegon no longer provides annuities so it was arranging this with the company L&G. This, sadly, took many more weeks to sort out, despite my regular chasing of Aegon and L&G, but has finally now been done. It will pay you £33.23 a month for the rest of your life.

The annuity income was calculated based on the terms you would have been offered in 2005. In the meantime, Aegon has covered three monthly payments totalling £99.69 as a gesture of goodwill.

Finally, to compensate you for such a dreadful experience it has offered to pay you £2,000 which you have accepted. It means that in total you will receive £12,904.45.

You said: “Every step has been such hard work until now. I am just so grateful it’s finally sorted and that we wrote to you. Thank you.”

Aegon said: “We are very sorry for the mistakes that were made — it is certainly not the level of service that we would want to provide, or that our customers would expect. We have paid the missing back payments and the tax-free cash, both including interest, and the annuity is now in place, with payments starting in May. We have also offered compensation by way of apology.”

Aegon said it would also support with any additional costs incurred in dealing with HMRC if any subsequent tax issues arise as a result of these payments.

Annuities are becoming more popular because the rates upon which payouts are based have been higher in the past few years. These policies suit those who want peace of mind that they will have a regular income in retirement. Some buy them to provide a regular income on top of their pension portfolio.

The income your money will buy depends on a number of factors, including your age and health. Payouts are higher for older applicants because annuity companies will expect to pay out for a shorter time than they would for someone younger. If you are in poor health you could get an enhanced annuity, where the income would be higher than someone could expect if they were in perfect health.

It’s important to pick the right policy because once you have bought one, you cannot change, surrender or cash it in if your circumstances change, or you have a change of heart.

If you’re in the middle of a complaint with a financial firm, the FOS rules state that a business has eight weeks to provide a final response. If the business doesn’t respond within a two-month period, you are entitled to escalate your complaint to the FOS.

In a case like this, where you cannot go to the ombudsman because it has not been two months since you had a response, you could make a small claim through the courts, if the amount is less than £10,000 (£5,000 in Scotland).

First write the company a “letter before action” (Citizens Advice has a template on its website) and if that doesn’t resolve the problem, you can start the process by filling in the N1 form on gov.uk. There will be a court fee to pay, based on the amount you are claiming.

£1,014,312 — the amount Your Money Matters has won back for readers so far this year

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