Pension misselling revisited - can we ask for a review?

*Denise*_2

I know this is rather after the fact. But reviewing my husband's pension arrangements I looked again at the compensation he received for a final salary pension that he was persuaded to move to a personal pension. The compensation wasn't massive.

Looking at it now I think that the final salary pension would be worth about £3k in today's money, whereas the personal pension fund is about £20k. Assuming a 5% annuity rate (and I think that's probably generous), that would give a £1k pension. So really the compensation was clearly highly inadequate. Even allowing for the markets, his fund was £25k before, we're still looking at a big difference.

Question is: is it possible to go to the financial ombudsman and ask for redress for this?

I actually want to move this pension away from the current provider, which is why I'm looking at it.

dunstonh

Was it a one off redress payment or is it addressed again when benefits are commenced at the scheme retirement age? Was it transferred into a personal pension or a section 32 buy out bond (most were transferred into the latter)

*Denise*_2

Hi Dunstonh

It was a one-off transfer into a personal pension - they just increased the units in the two funds invested in. In fact, a bit later they increased it again, saying that it hadn't been worked out correctly.

*Denise*_2

hope this is allowed - bumping this!

MikeJones_2

Hi Denise,

Question 1:
(a) Was the option to reinstate your husband's benefits into the original final salary scheme available and (b) was it ever discussed with him?

Some final salary schemes accepted members back in - with the appropriate compensation paid where necessary. Other final salary schemes simply refused to allow members who had transferred out to transfer back in.

Question 2:
It isn't entirely clear from your replies (to dunstonh's point) about whether the original offer or compensation (also called 'redress') involved a separate calculation at your husband's Normal Retirement Date (NRD)? Can you find this out?

Some pension providers made this arrangement with policyholders so that at the point benefits are taken (and it is usually at the equivalent age of the final salary scheme's NRD), a calculation is done to make sure the pension is no less than would have been paid by the original final salary scheme.

Question 3:
(a) Is the original final salary scheme still in operation today? (b) Did your husband transfer 'preserved benefits' - i.e. he had already stopped/left the pension scheme or (c) did he 'opt-out' (i.e. he was an active member of the scheme and came out of the final salary scheme and then effected the transfer)?

Answering these question might help us provide further guidance.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

*Denise*_2

Hi Mike, thanks vm for your reply! Just editing this to confirm details.

Question 1:
(a) Was the option to reinstate your husband's benefits into the original final salary scheme available and (b) was it ever discussed with him?
The new pension provider said that they had asked if his benefits could be reinstated in the original (civil service) scheme - but they could not be. I don't believe anything was ever discussed with him. He simply received a couple of letters on the subject.

Question 2:
It isn't entirely clear from your replies (to dunstonh's point) about whether the original offer or compensation (also called 'redress') involved a separate calculation at your husband's Normal Retirement Date (NRD)? Can you find this out?
The letter contains no mention of a calculation at my husband's retirement date. It says it was conducted in accorandance with gidelines from the Personal Investment Authority and that they have compared the benefits in the original scheme with the current value of the personal pension plan. No mention of looking forward to the ultimate benefits; although that would clearly have been the right thing for them to offer.

Question 3:
(a) Is the original final salary scheme still in operation today?
Yes! (Being civil service/MOD.)
(b) Did your husband transfer 'preserved benefits' - i.e. he had already stopped/left the pension scheme
Yes, he had already left the scheme/employer.

Thanks so much, great questions!

Denise

*Denise*_2

I do have all the paperwork with their calcs on if that's going to help us!

MikeJones_2

Hi Denise,

I need to check on something and will come back to you on this early next week, unless someone else replies earlier.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.

*Denise*_2

Thanks Mike, I look forward to hearing from you.

Denise

*Denise*_2

Just bumping this in case Mike or Dunstonh can help! (Or anyone else of course!)

MikeJones_2

Hi Denise,

If your husband had a preserved pension and had transferred that from a public sector scheme, my understanding of the pension review guidelines was that reinstatement into the former occupational pension scheme was the preferred/recommended course of action.

I have been searching to establish a definitive answer to this for the public sector schemes that you referred to, but haven't found one.

I would suggest therefore, that you write to the personal pension plan provider, explain that you are concerned that your husband may not have been offered reinstatement (as you have subsequently learned that this was the recommended course of action, where available) and ask for evidence that you were provided with this option at the time that compensation/redress was offered to him.

If they provide you with evidence in writing that your husband was offered reinstatement, then you have no further recourse as far as I can see, because you accepted an alternative offer, even though you now believe this will not have been enough (with hindsight).

If they cannot provide you with evidence, then make your complaint formal, in writing.

I hope this helps. I'd be interested to know the outcome, if you care to share it with us in the future.

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a current member of the Specialist Pensions Forum as well as being a Voluntary Adviser for The Pensions Advisory Service. I work with scheme members, employers, trustees, scheme administrators and advisers on most things to do with employer sponsored pension schemes. The views expressed by me in this thread are my personal opinions. You should seek professional advice from an appropriately experienced and qualified adviser. I am not an IFA.