Mis-sold Pensions

What is a mis-sold pension?

Pension mis selling has become more and more common in recent years, often stemming from poor financial advice. A mis-sold pension can include any pension scheme which you were advised to invest in without being provided all the required information or being told of the potential risks involved, preventing you from making an informed decision.

This transfer or investments may be encouraged at the suggestion of your financial advisor on the promise of a greater return on investment or interest rate, creating the illusion of a more comfortable retirement. But as with any form of investment, this might not always be the case.

If you’re unsure if you’ve been the victim of pension mis selling, here are the most common things associated with a mis sold pension:

• Your financial advisor fails to fully disclose all the required information associated with investing in a new pension scheme
• Your financial advisor fails to inform you of all the risks associated with investing in a new pensions scheme
• Your financial advisor fails to inform you of any potential charges you may incur in relation to pension scheme investment or withdrawal
• Your financial advisor fails to inform you of any potential limits on withdrawing your pension, both financially and over the investment’s life cycle
• Your financial advisor has already invested your pension in a new scheme prior to you signing any form of agreement
• Your financial adviser suggests that you move your work or personal pension into a SIPP or similar form or pension scheme
• Your financial advisor promises a 100% guarantee on return of investment

If your financial advisor has done one or all of these things, then it may mean that you’ve been the victim of pension mis selling. However, this makes you eligible for mis sold pension compensation.

Common types of mis sold pension

There are a number of mis-sold pensions that someone can be a victim of. These include SIPPs, defined benefit plans, defined contribution plans, SSAS, FSAVCs, and annuities. To help you decide if you have a mis sold pension, we’ve explained all the types of mis sold pension below.

A self invested personal pension (SIPPs)

A self-invested personal pension, or SIPP, is a personal pension scheme that allows investors to participate in schemes that will add to their total pension fund. They’re similar to standard pension plans but allow an investor to have more freedom in how they invest their money, therefore allowing for a potentially greater return on investment. Like other investment opportunities, SIPPs also offer tax relief, meaning you pay no capital gains tax or additional income tax.

A mis sold SIPP is one of the most common types of mis sold pensions, being very popular but generally not suited for anyone without solid investment experience. Your financial advisor shouldn’t encourage you to invest in a SIPP if you are unfamiliar with investing. Other signs you may have a mis sold SIPP include:

• Your financial advisor telling you a SIPP is better than another personal pension
• Your financial advisor promoting a SIPP using only the tax benefits it provides rather than a pension’s benefits
• Your financial advisor failing to inform you of all the risks associated with a SIPP
• Your financial advisor failing to inform you that HMRC can change the tax rules at any time, potentially decreasing your return on investment

If you’ve invested in a SIPP, especially with funds from another pension, and were not given the correct advice, then you may have been mis-sold the SIPP and can therefore make a SIPP compensation claim.

A defined benefit plan

A defined benefit pension, also known as final salary, is when you transfer your pension in exchange for a cash value. You then invest this cash value into a defined contribution scheme. These include personal pensions, stakeholder pensions, another employee pension scheme, and SIPPs.

As with any pension transfers, advisors should make you aware of any risks and costs involved in the transfer and usually shouldn’t encourage you to transfer your pension without a very good reason. Many of the same signs of a mis sold SIPP apply to a defined benefit plan. If you have experienced any of these then you may have been offered a mis sold pension transfer and be eligible for a claim similar to SIPP compensation – get in touch with the Compensation Experts to find out how we can help.

A defined contribution plan

Unlike a defined benefit plan, a defined contribution pension builds up a pension pot by combining yours and your employer’s contributions for an increased cumulative total. The return of a defined contribution plan will depend on a variety different factors, including the amount you put in, the fund’s investment performance, and the withdrawal choices you make when you retire.

As with all other pension types, an advisor must make you aware of all the risks involved with this pension scheme. If they advise you to transfer to this scheme without informing you of all the risks associated with the scheme, and the differences between a defined contribution and defined benefit pension, then this qualifies as a mis sold pension transfer.

A small self-administered scheme (SSAS)

A small self-administered scheme, or SSAS, is a common type of workplace pension. It is typically set up by company directors for themselves and other key staff members, though it can also be opened up to all employees. SSAS are flexible as they allow you to choose where and how you invest your money to increase your pensions return. However, this adds to the risk of the performance and longevity of your pension. Again, if an advisor encouraged you to transfer into this scheme and did not make you aware of all the risks involved, then you may have received a mis sold pension transfer.

A free standing additional voluntary contribution (FSAVCs)

A free standing additional voluntary contribution (FSAVC) is similar to a personal pension, but the main difference is that they can be used as part of an occupational pension scheme that allows you to add to the pension as and when you like.

Contributions are paid directly into the FSAVC, and then invested from there. However, your advisors is required to tell the investor where their money is being invested and inform you of the differences between an AVC and an FSAVC alongside all other required information before investing.

Annuities

Annuities are a type of retirement income product that you can buy with some or all of your pension pot. While they can be a sound investment, advisors must ensure that they explain all the hidden fees associated with an annuity. Not all annuities are equal, however, and an advisor must take individual circumstances into account when they are selling the product to avoid presenting you with a mis sold pension.

What to do if you think you’ve received a mis sold pension?

If you think you’ve invested in any mis-sold pensions, there is a variety of information and identification that will be necessary if you want to make any mis sold pension claims. This should include any information you can provide from when you made the investment, examples of which can include:

• Any or all paperwork from the associated pension investment
• Evidence of when you were first contacted to discuss the pension investment opportunity
• Records of moving your pension
• Evidence of what your advisor recommended
• A record of those you spoke to while making the pension investment
• A record of how much your pension you invested or moved

If you don’t have all of this information to hand, that’s not a problem. Having at least some evidence and records of the process is enough to begin the mis sold pensions claims process.

How we can help with mis-sold pensions

Here at The Compensation Experts, we work with solicitors who have years of experience in dealing with financial mis-selling, which  includes mis-sold pensions. Contact us today by filling in our contact form, or by calling us on 01618841451 to speak to one of our friendly, expert agents