Danica Pension has apologised to customers after discovering a discrepancy between the description of the gradual reduction of risk in Danica Balance with a minimum pay out guarantee and the actual gradual reduction of risk.

The discrepancy, which was discovered in spring 2022, meant that the actual gradual reduction of risk was not described correctly in the investment conditions applying to the product, which was sold from 2005-2014.

The error affected customers who chose an investment strategy where the risk was reduced as they get older, as the gradual reduction of risk was initiated earlier than described in the investment conditions for some customers.

However, Danica Pension clarified that the error relates solely to the description of the gradual reduction in the conditions and not to how the product has worked.

The provider is currently in the process of contacting around 75,000 customers whose investment mix has deviated from the description in the conditions, confirming that it will compensate those impacted.

It estimated that the risk has been gradually reduced faster than they would have wanted for approximately 6,000 customers as a result of the error.

Danica Pension has also confirmed that it will compensate those customers who suffered a loss as a result of the discrepancy, and that it has not had any financial gain from the discrepancy.

However, whether a customer is entitled to compensation due to lower returns as a consequence of the accelerated reduction of risk will be based on the customer’s expectation of the product, and whether it was made sufficiently clear to the customer how the product would work.

Most customers chose the product at a meeting with an adviser to explain how the product would work, according to the provider, and therefore received the expected product that they were informed about in connection with our advisory services.

"We have therefore examined which customers might have expected that Danica Balance with gradual reduction of risk worked in a different way and would have chosen another way to save for retirement if our investment conditions had been clearer in terms of the gradual reduction of risk," it stated.

“We apologise for the error, which we took steps to rectify as soon as it was discovered. We have now contacted the customers and informed them that their investment conditions will be corrected."

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