Many people can make a claim against a final salary pension transfer that was made following the wrong sort of advice of a financial adviser.
The Financial Conduct Authority (FCA) regulates the way that such transfers can be made. If you have received inappropriate advice, then you should talk to us about the next steps to take. In the meantime, it will be beneficial to answer a few basic questions about final salary pension transfers.
How Is a final salary pension defined?
Not everyone has a final pension salary. You probably only had this sort of pension if you worked for a very large organisation or in the public sector. People with them receive a pension based on how long they contributed to the pension fund, the accrual rate of the scheme and, most importantly, what their salary was at the point they left the organisation. In most cases, the pension pot available to you is multiplied by the accrual rate and your final salary figure to come up with your annual pension income. Other final salary benefits might include things like death-in-service payments to family members and a full pension being available should you fall ill and not be able to complete your contributions right up until your retirement date.
In short, this type of pension is a good one to have with lots of benefits which come with low risk, especially if your salary goes up as your career progresses. Despite this, some people have transferred their pension pot into other schemes. This may also be beneficial but often poor or inappropriate advice has been given which is why the FCA regulates conduct in this area.
When should you transfer a final salary type of pension?
There are some good reasons to transfer your pension from a salary type into another sort, such as a personal pension plan, for example. You might want to access a lump sum, for instance, and only be able to do so once you have switched pension plan. That said, even when you want a cash sum to be paid out, knowing whether this is the right course of action is not something you can do in isolation from the rest of your financial situation. In other words, professional guidance should always be sought from an independent financial adviser.
For example, many people may find it easier – and better for them in the long-term – to access equity from their home rather than to transfer their pension to an inferior one. Furthermore, a pension transfer that might suit someone else may not be in your best interests because of family commitments, health and age. The picture is often a complicated one which is why there are legal restrictions on what can be done and what a defined contribution pension actually is. A recent survey by the FCA found that half of such pension transfers did not receive the correct professional advice, however. That is why so many people who have gone through the process have ended up being disappointed and turned to legal advice in order to make a claim.
What is a final salary pension transfer claim?
Nearly all final salary pensions are known as a defined benefit pension scheme. In other words, they come with additional benefits over and above the fixed annual income they will provide in retirement. As such, transferring out of a defined benefit pension scheme only has advantages in very specific circumstances. Many people who have done so have decided to as a result of well-intentioned – but misinformed – advice or they have been swindled into thinking it will benefit them.
Either way, you can do something about the poor advice you received. Thousands of complaints to the Financial Ombudsman as well as the FCA has led the UK’s authorities to crack down on mis-selling in the pension industry. Those who don’t comply may be forced to reimburse you for losses if a successful claim is made. Thousands of former NHS and local authority employees have made such claims and recouped at least some of the benefits they would have otherwise received had they not been advised to opt out of their original pension scheme.
When would making a claim For a mis-sold pension transfer be appropriate?
It is always worth checking whether a claim is possible. Even if you chose to transfer your pension knowing the potential risks does not mean you were not mis-sold and that a claim is possible. Negligent selling can even be the case if your current pension scheme is continuing to perform well. Our legal expertise will help you to make your mind up about making a claim. If you were advised to transfer or told that you would be better off by switching schemes, then it is highly likely that a claim will be viewed sympathetically.