Mis-Sold Pension Transfer Advice

A recently published report from the Work and Pensions Committee indicates that we are on the verge of another big financial scandal – this time relating to mis sold pension transfers. It revealed that thousands of people with Defined Benefit (DB) pension schemes have been mis sold pension transfers, significantly reducing the security and value of their investment and incurring high fees. If you received advice to transfer your retirement savings out of a DB pension scheme then you may have been mis sold a pension transfer and you may be able to claim compensation as a result.

Defined Benefit pension schemes

DB schemes – also known as Final Salary Pension Schemes – are largely viewed as an optimum way to provide for retirement. However, very few employers now offer these schemes. They pay out a secure income for life, which increases annually – the amount is based on the number of years someone has worked for an employer and the salary that has been paid.

Mis sold pension transfers

The Financial Conduct Authority has acknowledged that this is a serious issue and that a mis sold pension transfer could be costly for the individual involved. Not only is the stability of the investment affected but excessive fees are often charged. There may be exit fees to pay, annual charges, as well as a fee for advice, which is usually charged as a percentage of transfer value. With many transfers valued between £400,000 and £1 million fees could be incredibly high.

Spotting a mis sold pension transfer

If you think you have been affected and you want to make a claim for a mis sold pension transfer there are a number of different factors involved. These could include any of the following:
– You received advice to transfer out of a company scheme even though it wasn’t in your interests to do so.
– When changing jobs you were advised to transfer out of the occupational scheme with your old employer to a private pension – rather than into the occupational scheme of the new employer.
– Not enough information was provided about the new scheme and the implications of transferring from your current scheme. For example, you may not have been provided with financial projections that would enable you to compare the impact of moving from an old occupational scheme into a new private pension.

For those who recognise their experience in any of the above scenarios there may be an opportunity to claim compensation for a mis sold pension transfer. Mis sold pension transfers are a significant growth area in terms of claims and complaints and this is likely to continue to be the case while more people find themselves out of pocket as a result of poor advice. If you have been affected then it’s important to make your claim as soon as possible.