Friends Life said it had unearthed a "particular issue" relating to 3,000 policies meaning they had all been wrongly calculated.
Of this group of Winterthur policyholders 40% lost out on what they should have been given.
Friends Life issued a statement, which read: "We have identified a small number of Winterthur customers where errors were made resulting in underpayments and we are in the process of contacting all of these customers to reimburse them.
"As part of this process, we have made changes to our systems to ensure that these errors cannot be repeated.

 All the affected Winterthur customers had with profit funds.

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"The specific problem was a fault with the system used to calculate the bonus for this particular group of 3,000 customers.
"The system which was found to contain a fault is only used on the accounts for this specific group of 3,000 customers, hence we can be absolutely confident that the 1,200 policies identified as undervalued, is the full extent of this issue.
"As part of our normal business practice we carry out checks on the multiple different systems and processes used in managing our current and heritage products and policies for all of our 5 million customers, which led us to identification of this particular issue."
A Daily Telegraph investigation reported the case of one of the 1,200 customers at the weekend.
Geoffrey Dalton, an accountant, had been paid the wrong pension every month for 12 years, the paper said.
Friends Life responded: "We have unfortunately made errors in dealing with Mr Dalton's Winterthur pension, for which we offer our unreserved apologies. This is clearly not the level of service we aim to provide, and we're sorry for the distress and inconvenience caused.

Mr Dalton referred his complaint to the Financial Ombudsman and we will fully comply with the Ombudsman's final ruling as soon as we receive it.
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