Insurer admits it over-valued pension fund by £15m

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The Independent Online

Insurance giant CGNU today said it has made a multi-million pound error with a pension fund.

Insurance giant CGNU today said it has made a multi-million pound error with a pension fund.

A company spokesman said it had discovered that its General Accident Managed Pension Funds/Diversified Fund was overvalued by £15 million this summer.

He said the mistake happened in June and July of this year but had only been spotted within the past month.

"There was an isolated failure in the administrative system involved in the pricing of units in the fund.

"It is impossible to say exactly how many people have been affected because the fund is designed for institutional investors such as company pension funds, not private individuals, though obviously private individuals have money in those pension funds.

"What we can say is that no one will lose out as a result of this mistake and we estimate the cost of putting the error right at around £135,000."

The CGNU spokesman added that those people who may have unexpectedly benefited from the mistake will not be asked for the extra money back.

Neither CGNU nor the Financial Services Authority, which regulates CGNU, could confirm whether the matter had been reported to the FSA.

But the CGNU spokesman said: "We will be following all regulatory requirements and have already checked our systems to ensure that a similar mistake does not occur again."

An FSA spokesman said: "We cannot comment on this matter. We cannot confirm whether CGNU has approached us about this or what action if any we may take."Mick McAteer, of the Consumers' Association, said: "The effect of this error will be twofold.

"Investors who were buying into the pension fund may have paid too much while those that were selling could have got more than they should have.

"In addition the performance of the fund would have appeared better than it really was.

"The lesson of this mistake is that it's crucial to get the administrative 'back office' stuff right.

"Sometimes investment groups concentrate too much on marketing and performance and don't sort out the vital administrative side of investment."