Prudential is writing to 39,000 customers to tell them it issued incorrect valuations of their pension funds up to seven years ago and offering them a total of £4m in "correction payments".

A Daily Telegraph reader, who wishes to remain anonymous, raised the alarm after being offered more than £2,000. He said: "There must have been a fundamental problem for this mess to go on undetected for so long with a concession only in 2011."

The life assurance company said most of the affected policyholders would receive payments of less than £100 but 9,000 will get up to £500 while 100 others will be paid £2,000 or more. The mis-pricing errors affected Scottish Amicable unit-linked pension plans between June 2004, and December......Read more Here