Although for some, future retirement plans seem too far in the distance, it is a decision that shouldn’t be taken lightly to ensure that your investments help towards providing an enjoyable future for you and your family.
More often than not investors enrol in their company pension schemes (often known as Occupational Schemes), which are sometimes defined as final salary schemes – these schemes give investors the security and knowledge of what they should receive in the future. However, some people are choosing to transfer out of these ‘safe’ schemes, into a personal pension scheme following advice they have been given from a financial adviser. Such schemes may not be suitable and offer fewer benefits with sometimes devastating results for investors.
A pension transfer often takes place when an investor has been attracted to an offer of high returns - although, they can often bear much higher risks to the investor. There is only a small minority of circumstances where such a transfer results in a positive outcome and more often than not it transpires that poor advice was given prior to the transfer.
Pension mis-selling is growing at an unprecedented rate and the Financial Conduct Authority believes that a staggering 1 in 8 believe that they have been mis-sold a pension. In an attempt to compensate investors, the government created a fund to compensate losses through the Financial Services Compensation Scheme (“FSCS”). The FSCS can pay compensation if a firm is unable to pay or unlikely to be able to pay for claims against it. The FSCS can award up to £50,000 compensation to investors that have received negligent advice, which is set to rise to £85,000 in April. In addition to this, investors can pursue a claim through the Financial Ombudsman in relation to claims against financial advisers who are still trading with a maximum compensation limit of £150,000.
Any advice provided by a regulated financial adviser should be provided acting in your best interests and with reasonable care and skill. If you have made a pension transfer following expert advice and any of the following applies to you, you could have been mis-sold a pension and suffered loss and damage:
You were advised to transfer your pension from a final salary pension scheme
You were not provided with guidance on how the personal pension would perform compared to your occupational pension.
You were advised to transfer to a self-invested personal pension (SIPP)
Your pension was placed in a high risk portfolio
You have not been given annual reviews and have been charged for on-going servicing fees
Due to your change in employment you were advised to transfer your pension fund from your current occupational scheme into a personal pension.
For advice on whether you may be able to make a claim for compensation. Don’t delay, as there are time limits which affect the outcome of your claim!
Consistent with our policy when giving comment and advice on a non-specific basis, we cannot assume legal responsibility for the accuracy of any particular statement. In the case of specific problems we recommend that professional advice be sought.