This piece first appeared in The Daily Telegraph on 9 October 1999
The text here may not be identical to the published text
"Are you alive? And if so please get someone to confirm it." That was the gist of a letter sent by insurers Axa Sun Life to Fred Bowers, 75, of Sheffield. Fred gets a pension of £52.56 a year (sic) from his old employers Sheffield Bakery. And Axa Sun Life wanted to check up that he was still around to collect it. So they sent him a Certificate of Existence, asking him to sign and date it and get a suitable witness to confirm that when Fred said he was alive, he was telling the truth.
Among the list of respectable professions entitled to fulfil this role was 'doctor'. But Fred's GP said he would charge £25. At that point Fred wrote to his pension providers, ABF pension scheme, and asked what was going on, as he explained.
"It's the first time I've had such a letter. If they're paying me and know I'm alive why do they have to quantify it? It's seeing democracy go crazy."
Axa Sun Life says that such Letters of Existence are the normal way of checking up that annuitants are still alive. In the case of people under 95 with small sums, Axa sends them out once every ten years. But anyone older than that or getting more than £30,000 a year gets them annually. It was Fred's first because the ten years had passed from his 65th birthday. But spokesman Peter Webb says that there is no need to spend money to get the signature.
"Part of the problem is that the wording on these letters dates back some time. And the practice of say a doctor to charge for writing one is new. But we are flexible and we are not trying to put up a barrier. We donít want him spending money unnecessarily. He should ring us and we will deal with it."
Fred was not impressed.
"You try to ring them, they pass you on, say this is the wrong office. They're frightened to talk to you, to sort it out. To be honest the money's neither here nor there, but some people would get very upset about it. And professional people, you know, are a bit chary about putting their signature to something. Eventually I got an ex-Inspector of the Inland Revenue I knew to sign it. I didn't pay him but let's say it cost me around £20 to sort it out."
Of course, not everyone is as honest as Fred. Prudential, one of the biggest providers of annuities, has cross-checked current annuitants with three years' records from the official Deaths Register. Out of 380,000 policy holders, around 300 were apparently being paid to people who had died. But a spokesman stressed this did not mean fraud was involved.
"Some could be guaranteed annuities for ten years say and the annuitant dies five years into the policy. Others could be where the widow inherited the full annuity. So it is a small problem. But we do take it seriously and we mail people over a certain age with a certificate of existence. It's a standard thing but delicately done in the best possible taste."
But there are moves in the industry to change the system. . Insurers are looking at alternatives and Prudential's pilot of cross-matching official information about deaths may become the normal means of checking up. Even prior to any agreement, another big annuity provider, Standard Life, has stopped sending out Certificates of Existence altogether. A spokeswoman told Money Go Round
"We found that although we asked for say a doctor's signature, no-one here actually checked if it was a real doctor's signature. And we realised they were unfriendly and not customer focused so we suspended them. We are still testing possible new procedures. We have tried sending out a simple card saying 'are these details correct?' and we have looked at companies which can check up on people. The one we find to be the most customer friendly we will use."
But one large pension provider is more sanguine about the prospect of fraud. The Benefits Agency - which this year will pay out nearly £40 billion in retirement and widows pensions - says
"In mainland UK we donít require a certificate of life. There is a reliance on the family or next of kin to be honest about their demise. There is an element of responsibility on the next of kin. There are some measures in place for pensions paid into some overseas countries."
In the past, some insurers paying pensions in the former British Colonies demanded a thumb-print each year on a form. But then they realised that some customers were cutting off the thumb of their deceased loved-one and keeping it in a jar.
It was March 1972 when a horrified Harold Steptoe discovered that his father Albert was still claiming tax relief for his mother and wanted to claim £1000 in back pension for her too. "But she's been dead for 33 years!" exclaimed a horrified Harold. But it did not stop his father trying to impersonate her to get the money.
Twenty-seven years later, it seems that no-one is quite sure how to solve the problem.
9 October 1999