Refuge policyholders face pay-back bill

Policyholders of Refuge, the home service life insurance group, will have to bear half the cost of compensating customers who suffered by transferring their occupational pension scheme benefits to a Refuge personal pension plan, writes Paul Durman.

Refuge has made pounds 11.6m of provisions to cover the compensation bill it faces because of the pension transfers scandal, which is still under investigation by financial regulators who suspect widespread mis-selling of personal pensions.

Just over half the cost, pounds 5.9m, has been charged against Refuge's main fund of policyholders' money. Tom Booth, Refuge chairman, said the life fund carried all expenses and received all income. Since policyholders benefited from the strength of the fund, it was right they should bear these costs.

Mr Booth said the provision would not damage the reasonable expectations of policyholders. 'The amounts we are talking about will have no effect whatsoever on the amount that our policyholders will receive.'

A total of pounds 6.7m of exceptional provisions restricted last year's pre- tax profits to pounds 24.3m, 50 per cent up on 1992. Life insurance profits were 4 per cent better at pounds 24.5m and unit trusts contributed pounds 3m ( pounds 1.9m).

A final dividend of 7.9p increases the total by 8.1 per cent to 11.35p.