The individuals affected are among those who have taken the Government's 'bribe' of National Insurance rebates and incentives to contract out of Serps, the State Earnings Related Pension Scheme.
Up to 5 million people have opted out of Serps since July 1988 by starting personal pensions to receive the minimum contributions from the Government.
But since 1990, there have been complaints about missing National Insurance rebates and lost application forms because of an administrative snarl-up between the insurance companies and the national DSS insurance office in Newcastle.
About 32,000 APP (approved personal pension) forms were involved. The insurance companies insisted that they had sent thousands of application forms to Newcastle, but the DSS denied ever receiving them.
In August 1993, the Association of British Insurers (ABI) announced a 'no blame' agreement with the DSS. In this, the DSS undertook to pay the rebates (and the 2 per cent incentive where appropriate) on the basis of lists of missing forms provided by the insurance companies. The insurance companies, for their part, agreed to make good any loss of investment growth that would have accrued from 5 October of the year following the tax year in which the plan should have been set up.
But many insurance companies were unhappy with the agreement from outset because of the considerable cost involved, particularly where plans should have been instated nearly six years ago.
According to Pensions Management magazine, only 62 out of 140 insurers offering APPs had implemented the agreement by the beginning of May 1994, representing a non-co-operation rate of 56 per cent.
Many rebate-only holders of personal pension plans may not be aware that their plans have never been instated, because some insurance companies do not issue annual statements for rebate-only contracts (that is, where the plan holder makes no personal contribution to the plan).
Anyone who is worried that they are affected should write to the institution that sold them the plan and ask for a statement showing the rebates and incentives paid.