Advised NOT TO have endowment

augustine_2

Back in 1990 my Independent Financial Advisor arranged my mortgage 'Interest Only'. But advised not to take out an endowment with this mortgage, but instead pay the money into private pension scheme I was told that this way it would yeild me a better return than in an endowment policy.

Okay, took his advise, he seemed to know what he was doing. After a couple of years struggling financially with doing the house up and trying to exist at the same time, i decided to freeze payments on my pension plan until i felt a bit more flush.

After many a year and numerous events, i still haven't re-started my pension plan - only paid into it for about 2 years so not a lot in it really. My husband did the same thing, froze his pension, albeit some years after mine, so he's got a bit more in his and he hasn't re-started his either.

So where do I go from here - was i mis-sold a pension? mortgage? or something else?

Please help!! Anyone got any suggestions?:(

EdInvestor

This is called a pension mortgage.The idea was that when you retired, you would take out 25% of the pension fund in tax-free cash and use that to pay off the mortgage. The rest of the fund cannot be taken out, it must be used to pay you a pension after you are at least 50.

If this was not explained to you along with the risks of doing it this way and of stopping making payments into the fund, then the product was not suitable for you and you should make a misselling complaint.

You should also enquire about switching your mortgage over to repayment, and/or start to make arrangements to overpay your existing I/O mortgage.

augustine_2

Thanks EdInvestor! Have changed mortgage from i/o to repayment last year!

I was told by my IFA at the time that the money would pay off the mortgage and give me a pension amount, but not advised of the risks involved, nor about what if my situation changes over the years, what if i could no longer afford to pay this amount into the pension (because they always want you to up the payments every year!)

Who would i have the complaint with, the IFA or the pension company? and how would i go about this?

dunstonh

You could complain but seeing as you ceased the payments fairly early into the term, any possible redress on a successful complaint would be very limited.

You cannot stop premiums into the repayment vehicle and expect it to hit target. IF you couldnt afford the cost of the mortgage and repayment vehicle, what would you have done had it been a repayment mortgage from the start?

The likely calculation on a successful complaint would be to compare the cost difference of the repayment mortgage and pension mortgage for the period you paid into the pension only. As this was a couple of years only, you would be lucky to get much money at all.