How to check if your pension was mis-sold to you – it could save you thousands
PENSION savers are being warned to check their retirement pots after a spike in complaints about certain types of mis-selling.
Many of these savers were given poor advice to move their workplace pots to schemes with risky investments, sky-high fees or both.
The impact of bad decisions might not be seen for years, meaning that unsuspecting savers can lose tens of thousands of pounds from their nest eggs before they realise what has happened.
If you’ve been affected, you can make a claim to the Financial Ombudsman Service for compensation, like the thousands of savers who are doing just that.
If you win, the Ombudsman will force the company to put you back into the financial position that you would have been in had you been properly advised.
Now experts want everyone with a pension to check that their money is in a trustworthy scheme, with investments that are suitable and fees that are fair.
MORE MONEY TIPS
Laura Miller explains what to look out for and how to complain if you think that you have been mis-sold.
COMPLAINTS ARE ON THE RISE
OF around 9,000 pension and annuity complaints made to the Financial Ombudsman Service last year, 7,000 cases were opened.
It reported 2,662 were about personal pensions, up by nearly ten per cent from 2,431 the previous year. Cases about transfers out of workplace pensions rose by 32 per cent to 1,688, up from 1,270 the year before.
Complainants won 29 per cent of cases which is slightly below the success rate for all FOS complaints which was 33 per cent.
Most read in Money
This is because pension cases can be very tricky to unravel. With many people not realising errors for years, important paperwork needed to make a claim can go missing.
ALWAYS HANG UP ON COLD CALLERS
CONSUMER champion Martyn James advises readers to give cold callers the cold shoulder as it’s now illegal to make unsolicited calls about pensions.
Martyn, who used to work at the Ombudsman, said: “The world of pensions is so confusing that people tend to go along with advice without really appreciating what’s going on. Never respond to a cold caller and watch out for offers to transfer you to new schemes that promise high returns.”
A good adviser will make clear what is happening with your money, tell how it is invested and how much they are charging – one to two per cent a year of your pot is typical.
DON’T LOSE YOUR WORK BENEFITS
BE wary of anyone encouraging you to move money out of your workplace pension scheme. You might lose valuable benefits.
This happened to thousands of former British Steel workers enticed into giving up their gold-plated final-salary pensions. Their retirement pots were put into shoddy investments by commission-hungry financial advisers.
Many lost tens of thousands of pounds.
The Ombudsman upheld their complaints in 90 per cent of cases and told the firms to put the workers back in the financial position they would have been if not for the bad advice.
Some of the increase in Ombudsman complaints were the British Steel workers’ cases.
HOW TO TELL IF YOU WERE MIS-SOLD
TO decide whether you have been given bad advice and if you are owed money, the Ombudsman will decide whether the recommendations you were given were right for your personal circumstances and goals.
It will also look at the investments your pension was put into and if they were too risky for you and whether your money was badly managed, causing you to lose out.
Some savers have won cases where they complained about dodgy recommendations to invest in overseas property, Mexican golf courses and palm oil forests.
These schemes were often extremely high risk and, in some cases, outright scams.
HOW TO MAKE A COMPLAINT
CONSUMER champion Martyn James who used to work at the Ombudsman has given his insider tips on how to get your money back if think you’ve been mis-sold a pension.
1. BEWARE CLAIMS MANAGEMENT COMPANIES: Pension complaints can involve huge complexity but you don’t need to pay anyone to make one on your behalf.
Claims management companies make complaints for you and charge as much as 20 per cent of any sum you get back.
Martyn said: “You really don’t need to use a claims manager. Ultimately, you’re throwing cash away. You’ll still do most of the work as they’ll ask you for all the information you have about the complaint anyway.”
2. COMPLAIN TO THE FIRM FIRST: If you’re not sure if you were misadvised, tell the firm you’re not sure if the advice you received was best for you, ask them to investigate this, and to give you an answer in writing.
If the pension firm or adviser has gone bust, you may be able to make a complaint to the Financial Services Compensation Scheme, which deals with cases of failed firms.
3. WRITE EVERYTHING DOWN: If you have no joy complaining to the firm, go to the Ombudsman.
Take time to write down everything you remember about the sales or advice process. Explain what you understood from the adviser or pension company.
4. COLLECT ANY PAPERWORK YOU CAN: Advisers are supposed to document all aspects of the sale and advice process, from what they offer or recommend, to your understanding of the risks, and how the policy works.
Read More on The Sun
Don’t worry if you can’t find these documents – the Ombudsman can force the firm to hand them over and they are required to keep the documents forever.
5. DON’T LEAVE IT TOO LATE: It might be a long time since you were advised, so make sure you explain when you became aware of the problem. You usually only have six years to complain.