Richard Hutchings was told to keep paying pounds 40 a month into his Axa Equity & Law pension plan for two years even though he became unemployed one month after he started it.
Inland Revenue rules say that pension contributions can only be made out of earnings.
To make matters worse, even after Mr Hutchings contacted the company 10 months ago, when he realised he should not have been paying, he has still not received a refund of the pounds 800 premium.
Axa admits the advice given to Mr Hutchings, a ceramics student, was 'questionable'. It also accepts that its administration procedures were at fault.
The company says it is prepared to refund his contributions, but it has so far refused to add interest to the money it has held since he started his pension in May 1991.
Mr Hutchings, 35, said: 'I feel let down. As a student, I went short on everything else to keep up my pension payments, because I thought they were vital to my future. It now turns out I was wrongly advised to do so.'
In May 1991, while working as a draughtsman in Nottingham, Mr Hutchings was approached by a consultant from Ashwood Law, a local financial advice firm which was tied to Equity & Law.
'The consultant said that I should transfer my previous 10 years' contributions from a local government and a Royal Mail pension scheme.
'I agreed and made the transfer. Unfortunately, shortly after starting my new pension, I was made redundant.'
Mr Hutchings informed the consultant that he was now unemployed. He was told to keep on paying, because he would find work soon. Despite telling her a year later that he was still jobless, nothing was done.
In September 1992, Mr Hutchings began a two-year ceramics course at the University of Derby. From a student grant of pounds 265 a month, he continued to make monthly payments of more than pounds 40.
Early last year, a Prudential salesman he met informed him that Inland Revenue rules meant he should not be making contributions.
Payments into a pension plan may only be made on the basis of a person's earnings in a year. For example, the Revenue allows 17.5 per cent of net pay to be paid before the age of 35, and 20 per cent before 45.
Dividends or interest from savings cannot be counted as earnings. Nor can women count their husbands' incomes.
Mr Hutchings got in touch with Axa in April. He was seen by a consultant, who immediately advised him to stop any further payments to his scheme.
However, since that time, and despite repeatedly writing to Axa Equity & Law, he has not received any refund on his contributions nor has the company written to him since November.
An Axa Equity & Law spokesman said Ashwood Law was no longer tied to his company. He blamed the delay on a combination of internal administration problems and the Inland Revenue.
'When Mr Hutchings first got in touch with us, we responded quickly. Then we sent him letters asking for more information and his replies reached the wrong department.
'Since November we have been waiting for the Inland Revenue to confirm that he had no relevant earnings over that period, before we offered a refund.'
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