UK legislation around pension rights have, in the past decade at least, become far more flexible. Now that minimum contributions have increased, we’re eligible for a healthier-looking pension pot. We can do more with our pensions, whether it’s transferring them over to a new provider or opting out completely.
Unfortunately not all pension advice given to people like you and me had our best interests at heart.
A pension adviser needs to understand the circumstances of their client; that the client is comfortable with the fees and charges, and that they understand the processes and the risks. Failing to do this commonly leads to a service being mis-sold – which could potentially put you in hardship.
One of the most common examples of this is pension transfers, which is why we’ve written this blog. If you think that you might have been mis-sold a pension transfer, carry on reading.
What is a pension transfer?
A pension transfer from a defined benefit (salary-related) pension scheme means giving up your scheme benefits in return for a cash value which is invested in another pension scheme.
So you could lose benefits such as being able to pass a portion of your pension to your dependents or that the sum you get every year is less than your final salary.
The transfer is irreversible, which means that your previous occupational pension is unavailable to you from the moment you transfer. An important thing to note is that the return you will receive depends entirely on how you invest the pension – ultimately, pension transfers eliminate the guarantee of an income when you retire.
Suffice to say that the whole process is risky. There are limited circumstances in which a pension transfer taken from a (guaranteed) salaried pension scheme is a logical or profitable choice. This is why pension transfers are widely mis-sold.
How will you know if you’ve been mis-sold a pension transfer?
It can be difficult to know if you’ve been badly advised, and you may only realise once you have been negatively affected (by which time it may already be too late). We’ve flagged the following scenarios up as likely circumstances in which you’ll have been mis-sold a pension transfer. These are scenarios that crop up time and time again.
- You were not informed about the benefits you would be giving up if you transferred from an occupational pension scheme to an alternative personal pension scheme.
- You were advised not to join a company pension scheme when you were eligible to join. Instead, you were advised to take out a personal pension instead. In this scenario, a personal pension is never going to benefit you more because, having not had a company pension scheme, you’d have nothing to necessarily compare it to.
- The advice you received only referred to a single product that the adviser wanted to sell, and no other options or alternatives were discussed.
- The actual costs associated with transferring a pension were not fully disclosed.
- Despite the fact that you continue to pay for a service, you have not received an annual review or communication of any kind.
- You were asked to transfer funds to a scheme with more risks – however, these risks were not communicated fully, or at all, to you.
You can see how easily some are advised to transfer their retirement savings. A pensions adviser is an assumed authority on the matter and even a figure of trust.
If you think you are in the process of being mis-sold a pension transfer, think about your adviser and consider the following. Your pensions adviser must:
- Be qualified to give advice on pension transfers.
- Provide you with all the information you need to make an informed decision on your own.
- Offer their opinion, based on clear logic as to whether or not a pension transfer is in your best interests.
- Have been given specific permission from the Financial Conduct Authority (FCA).
Contact our mis-sold pensions team
We’re sure you understand that the consequences of giving up your retirement fund can be life-changing, for the worse. Fortunately, our mis-sold pensions claims team can help. Our dedicated team work alongside you so that you can claim compensation. We work on a no win, no fee basis.
Call us on 0161 968 0768 or use our online enquiry form – it’s quick and easy to use.