Mis-sold Occupational Pension???

manabootadug

Hi There

I have a rather complicated query relating to my occupational pension which was sold to me between 1990 and 1993. I am a former employee of a large manufacturing company. In 2003 I was made redundant due to factory closure therefore my pension is apparently now preserved until I reach the age of 60 (I am currenly 30 something years of age).

My query relates directly to the question..."What constitutes mis-selling of a pension product"? On looking back I can remember very clearly being summoned to the HR department to speak to an HR Adviser who at the time informed me that it would be a good idea to join the scheme as it would be good for my future...sound advice undoubtedly. However in retrospect there are a number of areas which I feel prevented me from making an informed choice about whether to consider the alternatives to the occupational option.

As I said, I had a 10 minute discussion with my HR Adviser who to my knowledge had no professional financial experience what-so-ever (no disrespect to her). We had a short discussion and I was told that everyone who goes from a temporary to permenant contract "must" join the scheme. I was left in no doubt that I should join the scheme. I signed up and around £60 was deducted from my salary on a monthly basis. I was given a booklet (which i still have) and given no other information relating to terms and conditions etc.

I have the following specific questions which I'd be grateful if anyone could provide some advice:-

1. Should the company have provided a professional financial Adviser to offer advice on the occupational scheme v other alternatives?
2. Should the benefits of the scheme be outlined at the point of sale ie investments/risks etc?
3. I am currently looking to cash in my pension....apparently I cannot do this, however I was never informed of this, is this right?
4. I now work for another company and as an alternative to "cashing in" I considered transferring to my current employer. However, I cannot transfer my Pension to my current company's scheme due to issues relating to future rights. Although I would not expect my old employer to discuss this with me specifically, there was no mention that some schemes will not allow a transfer?
5. Am i likely to have a case for compensation if I complain.

Although the old pension provider was always regarded as a good scheme, I feel (now that i'm a bit older and wiser) that the the Scheme may, or indeed may not have been the right scheme for me. I get the feeling I have been mis-sold this extremely important financial committment.

Any advice anyone can offer would be much appreciated. Cheers

jem16

manabootadug wrote: »

therefore my pension is apparently now preserved until I reach the age of 60 (I am currenly 30 something years of age).

As you mention preserved pension I assume it's a defined benefit scheme (final salary). Can you confirm?

1. Should the company have provided a professional financial Adviser to offer advice on the occupational scheme v other alternatives?

Did you ask for advice?

2. Should the benefits of the scheme be outlined at the point of sale ie investments/risks etc?

You would normally be given the scheme booklet. Did you ask for it if it wasn't provided?

3. I am currently looking to cash in my pension....apparently I cannot do this, however I was never informed of this, is this right?

That's correct. A pension is a retirement scheme and you get it at retirement age.

4. I now work for another company and as an alternative to "cashing in" I considered transferring to my current employer. However, I cannot transfer my Pension to my current company's scheme due to issues relating to future rights. Although I would not expect my old employer to discuss this with me specifically, there was no mention that some schemes will not allow a transfer?

Schemes do not have to accept a transfer. Whether of course it's a good idea or not anyway depends on the exact circumstances of both schemes as well as your own circumstances.

5. Am i likely to have a case for compensation if I complain.

How do you feel you have lost out?

Although the old pension provider was always regarded as a good scheme, I feel (now that i'm a bit older and wiser) that the the Scheme may, or indeed may not have been the right scheme for me. I get the feeling I have been mis-sold this extremely important financial committment.

How do you feel you have been mis-sold? You have had the benefit of a final salary pension which carries no investment risk unlike all the other options. You have probably paid in a fraction of what it would have cost you to contribute to a defined contributions scheme. Meanwhile your preserved pension will continue to grow in line with inflation until your retirement age.

What other choice would you have made?

manabootadug

Quote: As you mention preserved pension I assume it's a defined benefit scheme (final salary). Can you confirm?
Answer: Yes it is!

Quote: Did you ask for advice?
Answer: No but perhaps the company had a duty to offer?

Quote: You would normally be given the scheme booklet. Did you ask for it if it wasn't provided?
Answer: Got the booklet...mentioned this in my post!

Quote: That's correct. A pension is a retirement scheme and you get it at retirement age.
Answer: Not always the case.

Quote: How do you feel you have lost out?
Answer: Who knows, perhaps I would have had a better deal with a private scheme.....this should at least have been discussed.

Quote: How do you feel you have been mis-sold? You have had the benefit of a final salary pension which carries no investment risk unlike all the other options. You have probably paid in a fraction of what it would have cost you to contribute to a defined contributions scheme. Meanwhile your preserved pension will continue to grow in line with inflation until your retirement age.
Answer: Yes it will continue to grow but only by the rate of inflation (a very small amount)....another part that wasn't explained. I think i was mis-sold my pension because the person who sold me the package did not have a financial background and was not registered with the FSA and the company were using unqualified staff to sell the scheme. You wouldn't let an electrician do your plumbing?, why oh why did i let an HR Adviser sell me a pension? I believe financial adviser have a duty to discuss alternatives?????

McKneff

What do you want to happen.

I dont understand your complaint. Presumably you put in a contribution and your company also contributed to it. They give you free money and youre complaining. I am confused.

manabootadug

McKneff wrote: »

What do you want to happen.

I dont understand your complaint. Presumably you put in a contribution and your company also contributed to it. They give you free money and youre complaining. I am confused.

i'm not complaining....i'm asking for advice!

jem16

manabootadug wrote: »

Quote: Did you ask for advice?
Answer: No but perhaps the company had a duty to offer?

It's your duty to make sure you understand what you are agreeing to.

Quote: You would normally be given the scheme booklet. Did you ask for it if it wasn't provided?
Answer: Got the booklet...mentioned this in my post!

Sorry I missed that. You have all the information then.

Quote: That's correct. A pension is a retirement scheme and you get it at retirement age.
Answer: Not always the case.

Very rarely otherwise. The only reason for getting it early would be ill-health. What other reasons do you refer to?

Quote: How do you feel you have lost out?
Answer: Who knows, perhaps I would have had a better deal with a private scheme.....this should at least have been discussed.

There is no way any private pension would have given a better deal, especially as your employer would not have been paying into any other scheme.

How much did you pay percentage wise?

Quote: How do you feel you have been mis-sold? You have had the benefit of a final salary pension which carries no investment risk unlike all the other options. You have probably paid in a fraction of what it would have cost you to contribute to a defined contributions scheme. Meanwhile your preserved pension will continue to grow in line with inflation until your retirement age.
Answer: Yes it will continue to grow but only by the rate of inflation (a very small amount)....another part that wasn't explained.

Would you rather it went down in value as a money purchase private pension can?

I think i was mis-sold my pension because the person who sold me the package did not have a financial background and was not registered with the FSA and the company were using unqualified staff to sell the scheme. You wouldn't let an electrician do your plumbing?, why oh why did i let an HR Adviser sell me a pension? I believe financial adviser have a duty to discuss alternatives?????

Personally I would be giving the HR adviser a pat on the back. You have been given excellent advice.

manabootadug

Quote: Personally I would be giving the HR adviser a pat on the back. You have been given excellent advice.

Ah well....that was lucky then!!:j

dunstonh

Quote: Did you ask for advice?
Answer: No but perhaps the company had a duty to offer?

No they dont have a duty to offer. However, there are 30,000 IFAs out there that could have done.

Quote: How do you feel you have lost out?
Answer: Who knows, perhaps I would have had a better deal with a private scheme.....this should at least have been discussed.

No it shouldnt. Its not the role of the employer to do that. Plus, any financial adviser putting you into a personal pension when a final salary scheme exists is running a great risk.

Answer: Yes it will continue to grow but only by the rate of inflation (a very small amount)....another part that wasn't explained. I think i was mis-sold my pension because the person who sold me the package did not have a financial background and was not registered with the FSA and the company were using unqualified staff to sell the scheme. You wouldn't let an electrician do your plumbing?, why oh why did i let an HR Adviser sell me a pension? I believe financial adviser have a duty to discuss alternatives?????

They do not have a requirement to be FSA authorised. They dont have to have a financial background. They are not selling the scheme. They are not giving you advice and therefore you cannot be mis-sold. You choose to opt in our out based on your own personal choice or upon the advice given by your financial adviser. You didnt have one and took on that responsibility for yourself.

McKneff

Think of it this way, in 30 plus years it will be an income (however small)
Gwd knows what the worldwill be like in 30 years but that's by the by.

Ohhhh to be 30 plus - enjoy,
good luck
Annie

jamesd

manabootadug wrote: »

i'm asking for advice!

Be happy that they suggested that you sign up for it. Way too many people don't and would be in a far worse position than you as a result of not doing so. Assuming it's a final salary scheme you got one of the best deals in the pension world, one that most current employees would love to have.

If you want to transfer it'll normally be possible to get a transfer value from this old scheme and transfer that to a personal pension. It might be worth doing if you have a high tolerance for investment risk and are more than say ten years from retirement but the old work scheme may require an IFA to sign off on it since it's a high risk transaction. From the look of your posts this would not be a wise thing for you to do, since you don't appear to have sufficient investment experience at present to make this a sensible choice.

If you were to pursue redress for some claim about this your first challenge would be to demonstrate being made worse off because the amount you'd be worse off by is the maximum redress payment you might get made into some other pension (cash payout isn't available for pension cases). That'll be almost impossible to do in this situation because you're almost certainly a lot better off than with any other pension decision you could have made. Almost certainly is there just out of prudence, impossible is closer to the truth.

Buy the HR person a drink the next time you meet them. They almost certainly did you a great service and you did well to act on their guidance.

MikeJones_2

Interesting thread. I'd like to add some comments, time permitting, over the weekend.

Any TPAS lurkers want to throw any comments in, in the meantime?

Mike

I work in the field of Pension Education and Pension Guidance in the UK. I am a 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.