Many UK pensioners are facing a crisis because of pension freedoms today. The ability to do as you wish with your savings does not lead to complete freedom. There are many things to consider when it comes to pensions, and it is often hard to decide between seemingly equal options.
Since there are various things to consider, many unscrupulous individuals mis-sell pension products. It was especially prevalent in the late 1980s when pensions could be transferred between providers or products. Recently, the ‘Pension Freedom’ reforms of 2015 have caused a resurgence in misselling products. Here are some mis-sold products and how you can make a claim.
SIPP or a Self-Invested Personal Pension plan allows holders to manage or select investments they want. A specialist SIPP operator or an insurance company sets up this type of financial vehicle. Meanwhile, SASS is a Small Self-Administered Scheme. Its difference from SIPP is it is for a company’s employees, established by its director.
Investigators found that mis-sold products like SIPPs hold illiquid and underperforming investments that have high charging structures. As such, they are inherently higher-risk than alternatives.
Many independent financial advisors gave advice that did not comply with requirements from the Financial Services Regulator. Advisors essentially told pensioners to set up these pension products without considering alternatives within the SIPP.
Defined benefit or final salary pensions are schemes where benefits are based on an employee’s final salary upon retirement. You can calculate this based on average salary or the employee’s salary before retirement. Salary pension schemes are popular since they provide a guaranteed income and also have add-ons like death benefits for spouses.
As such, transferring this type of pension is unsuitable. However, many final salary pensions still get transferred, which results in consumers suffering from grave financial losses. What’s worse, they become ineligible for compensation.
The Qualifying Recognised Overseas Pension Scheme or QROPS is for people who want to emigrate once they retire. This type of financial vehicle still meets specific HMRC requirements, even if it is an overseas pension. Some people had been mis-sold a QROPS. The seller promises them a cash advance upon the pension transfer, but they instead land a 55 per cent income tax charge.
If you believe you have a mis-sold product, you can claim compensation by writing to your advisor. First, you must specify the product that you think was mis-sold while describing the circumstances under which you got it. Talk about why you believed the product meets your needs at the time, and why you think it is inappropriate now.
Inform your advisor of the compensation you need and the timeframe within which they must respond. If you do not receive a satisfactory response within that frame, bring up the matter with the Financial Ombudsman Service.
If you suspect that your financial advisor mis-sold you a pension plan, you need to consult a company that specialises in consumer protection and identifying mis-sold items. Do not put your hard-earned savings and retirement funds in danger because of someone else’s financial blunders.
Contact Consumer Reclaim for enquiries on mis-sold products in the UK like pension plans, services. Our partners can help you deal with claims on professional negligence, mis-sold items, credit litigation and more. Get in touch with us today for more details.