Mis sold AVC's

Poolgranny

How can I actual prove I believe I was mis sold AVC's.
A rep from the Pru came along to our organisation at a time when our pension provider was doing a presentation on the benefits of the final pay pension scheme. We were offered the opportunity to meet with the man from the Pru to discuss AVC's. With only five years to go before retirement I was advised that AVC's were a better option then buying additonal years. I actually didn't want to buy additional years I wanted to save a nest egg or play money for my retirement. I was told I would be able to draw my AVC's as a tax free lump sum to do what I wished with. Now it comes to retirement I am told that I can only withdraw 25% of it and the remainder I have to invest in an annuity. That can be either with the Pru, a n other or my main pension provider. This is not what I thought I was offered. Had it be made clear to me that I could not withdraw the whole sum then I would not have saved in this way. I have complained to the Pru and they are going to carry out an investigation but surely as no one was in that room with me other than their rep, how am I going to prove what was said. There is no way I would have saved my money in this way as I had plans for that lump sum and it certainly wasn't to invest in a pension product. I feel cheated.

dunstonh

How can I actual prove I believe I was mis sold AVC's.

It is actually very difficult to be mis-sold AVCs. Most are set up without advice or no audit trail of advice and increasing your retirement benefits is rarely seen as a bad thing. FSAVCs used to have a higher ratio of complaints but since the 2006 rules gave FSAVCs benefits that AVCs dont often have, complaints dropped away.

With only five years to go before retirement I was advised that AVC's were a better option then buying additonal years.

That could well be the case. Buying of added years has some positives that can make them attractive and right. However, they can be very expensive for short term cases and that will put some people off. Also, the buying of added years doesnt gave you a lump sum. So, if that is your complaint but you were considering that as a possible option then it doesnt help your cause.

I have complained to the Pru and they are going to carry out an investigation but surely as no one was in that room with me other than their rep, how am I going to prove what was said.

You can't. Documentation is King in any complaint. Unprovable verbal allegations will nearly always be trumped by the documentation. If it wasn't then people could make up all sorts of things and the system would collapse.

The key document will be the reasons why letter. Take a read of your copy and see what it says. That will be the main document Pru will use in assessing your complaint.

rpc

It doesn't help with the alleged mis-selling, but can you transfer your AVCs to a different pension, take your 25% and then go into flexible drawdown?

It will cost you tax over your original plan, but I doubt you "have to buy an annuity".

Debt_Free_Chick

Poolgranny wrote: »

How can I actual prove I believe I was mis sold AVC's.
A rep from the Pru came along to our organisation at a time when our pension provider was doing a presentation on the benefits of the final pay pension scheme. We were offered the opportunity to meet with the man from the Pru to discuss AVC's. With only five years to go before retirement I was advised that AVC's were a better option then buying additonal years. I actually didn't want to buy additional years I wanted to save a nest egg or play money for my retirement. I was told I would be able to draw my AVC's as a tax free lump sum to do what I wished with. Now it comes to retirement I am told that I can only withdraw 25% of it and the remainder I have to invest in an annuity. That can be either with the Pru, a n other or my main pension provider. This is not what I thought I was offered. Had it be made clear to me that I could not withdraw the whole sum then I would not have saved in this way. I have complained to the Pru and they are going to carry out an investigation but surely as no one was in that room with me other than their rep, how am I going to prove what was said. There is no way I would have saved my money in this way as I had plans for that lump sum and it certainly wasn't to invest in a pension product. I feel cheated.

To be honest, there is nothing in the pension/tax rules or Pru's policy that prevents you taking it all as cash. The problem is that the final salary scheme, to which the AVCs are attached, must also allow it. They may have allowed it back when you took out the AVCs but changed their rules since then.

Have you asked the pension scheme administrators if you use your AVCs to pay out the pension scheme cash?

Poolgranny

I do have some documentation that the rep drew up and I remember the interview was recorded, so who knows Pru maybe able to produce the recording. It is going to be hard to prove that I was mis sold, or misunderstood what I had been sold. Is there a difference?
As a nurse when I have to explain the intricate workings of the body to the layman I use terms and analogies they can understand and obviously the pru rep did not achieve the equivalent with me or I wouldn't be in this position.
In my head what I took away from the meeting was that I would be able to withdraw all my cash as a lump sum to use as I wished.
Yes I do believe that my main pension provider will allow me to use the total sum to invest in to the Final Pay Pension and thereby increasing the amount that I can take tax free from my main pension by £6000 but this no way makes up for the loss of what I thought I would get as a lump sum from the Pru. £22,500.
Finance is not my field of expertise and talk of life time allowances, life time percentages, commutation factors and 'flexible draw down' makes me glaze over. Even taking independant financial advice hasn't helped.
I have asked I take 25% as a tax free and pay the tax on the outstanding balance and have been told no. In effect this means I cannot retire after all I will have to go out and get another job or sell up.

Debt_Free_Chick

Poolgranny wrote: »

I have asked I take 25% as a tax free and pay the tax on the outstanding balance and have been told no. In effect this means I cannot retire after all I will have to go out and get another job or sell up.

You would never have been able to take the AVCs as cash in addition to the cash from the main scheme - is this the NHS scheme? The total cash would never have increased by the AVC fund.

Let's say that the main scheme would have given you £50k in cash and your AVCs built up to £45k. If the main scheme allows it, you could take all the AVCs in cash, but you would only then get £5k from the main scheme. However, the main scheme is saying "no, we'll pay you the £50k in cash" but you then have the AVCs to buy extra retirement income.

You haven't lost the cash - you're just getting it from a different place.

Poolgranny

Yes I realise I haven't 'lost' the money, what I appear to have lost is the immediate access to it. I realise now that my belief that I would be able to have taken back my avc's and my retirement lump sum was naive but that was I was lead to believe at the time I started saving. No this is not a NHS pension but the USS Higher Education one. I just happen to be a nurse working in HE. I never intended to use my cash for pension provision. I had no idea that avc's were intended to be used to boost pension provision. I thought they were just a way of tax free saving that I would be able to withdraw when I wanted after retirement. I entered into this over five years ago and never gave it another thought until now when I wished to recover my' savings' for my retirement. I will have to go down the route of appealing to the financial ombudsman as this has really left me in a difficult financial position. In the meantime I can't take my basic pension because it would be a better financial option to invest my avc's in my basic pension scheme as it is a final pay scheme and I would be able to take a greater lump sum but it will still not cover my needs.However I can't do that until I have exhausted the possibility of some redress from the Pru. So I am starting retirement with no pensionat all at the moment as I can't risk making another wrong decision. I was relying on that money to pay off my mortgage and have a small cushion for enjoyment and emergencies. Now it would appear my only choice is to pay off the mortage and have no cushion and therefore I will have to sell up to release capital in the house for lifes little luxuries or start working again.

xylophone

http://www.uss.co.uk/Factsheet%20List/Factsheet%201-%20Additional%20Voluntary%20Contributions%20FS.pdf

"USS offers two separate AVC options, one that allows you
to buy extra service in USS (Added Years AVC) and a money
purchase facility.
Added Years AVC
This is administered by Universities Superannuation
Scheme Ltd (the Trustee Company) and allows you to buy
extra years’ and days’ service in USS, which will increase
your USS benefits (pension, tax-free cash sum, spouse’s/civil
partner’s/dependant’s pensions).
Money Purchase AVC
This is administered by Prudential and allows you to pay
additional contributions that are invested for you by
Prudential to provide a fund at retirement to be used to
buy extra retirement benefits. You can buy an extra pension
(called an annuity). If you do this, this can be purchased at
retirement from Prudential or another annuity provider. Or
you may be able to use the fund at retirement to purchase
extra service in USS.
This forms part of the main scheme from that point.
Importantly, since 6 April 2006, your Money Purchase AVC
fund can be taken as tax-free cash. You are allowed to
take up to 25% of the capital value of your benefits in USS
(including the USS Money Purchase AVC) as tax-free cash.
Therefore if your Money Purchase AVC is less than 25% of
the overall value of your USS benefits, you could opt to
take your entire USS Money Purchase AVC fund as cash and
take less cash from the main scheme, receiving a higher
USS pension. However, tax regulations may change, so you
cannot altogether guarantee that you will be able to take all
or part of your Money Purchase AVC fund as tax-free cash
when you retire. Full details will be provided at the time
of retirement.
Under any money purchase type facility the benefits you
receive depend on how much you pay in, the performance
of the investment fund you choose and the cost of buying
your pension at retirement, if this is what you choose to do".

Were you given this explanatory booklet (or an earlier edition of it)?

Poolgranny

I do not recall the fact sheet that you have linked to. I joined the USS scheme in 2005 and received a pack of 'fact sheets'. Fact sheet one refers to AVC's but it doesn't look like that one. I started paying Money purchase avc's in 2008. Whether I was sent or given any others at that time I do not recall and I do not seem to have a copy of them. I do have a lot of other info such as a customer journey fact sheet used as an example of what I could expect but quite frankly that might as well be written in swaheli to me. As I said before I am a nurse and understand the working of bodies. Pensions were way out of my field of understanding. All I did was contribute. USS have given me a mind boggling number of options that i can choose from including and the ones you mention and now I am having a crash course on where I have gone wrong. (For me). I thought I was paying into a pension and my employer also contributed and in addition to that I was saving a lump sum that I could liberate for my own use on retirement. I find now that I have to invest this lump sum or 75% of it and not be able to take it all as cash. If I opt to take the 25% tax free from the avc's and then invest the rest into my USS scheme, then overall I get a lower tax free lump sum from my pension pot. To get the best lump sum I have to invest all of my avc's into the main scheme. Yes I get an increased pension pot by £75 per month but that was not what I intended for my money. I expected to be able to take my money back as a lump sum. Had I known that I wouldn't have been able to I would have invested it in ISA's.
I have no doubt that the Pru will argue that I was not mis sold avc's and theoretically they may be right, however I left that interview in 2008 reassured that I would be able to take my avc's back as a cash lump sum to do with as I wished. Not expected to buy an annuity or use it to increase my USS pension pot. I may not be able to get to grips with the complexities of pensions but I know I thought that I would be able to withdraw that money as a lump sum as well as any lump sum I might be able to take from my pension. I have spent the last five years planning my retirement based on that understanding. I retired two weeks ago and now will have no pension until I can get a satifactory explanation from Pru. I dare'nt start taking my USS pension yet as I risk losing yet more of my lump sum to the pension pot.
I thank all of you that have tried to assist but I think I am between a rock and hard place. I feel I have been duped. Legally I may not have been, morally I have.

rpc

Can you scan in the fact sheet you have? The one xylphone posted says that you can do as you had planned. We'd need to understand if those same rules apply to you.

You could also ask for a copy of the scheme rules and post the relevant excerpts.

I think if you want any more help then (unless someone else involved in the scheme comes along) then you need to post the details of what you have been given so that other people can interpret it.

Are you in a union? They should be able to help you understand your pension.

dunstonh

I have no doubt that the Pru will argue that I was not mis sold avc's

What does the recommendation report say? That is the key document that they will go by.

However, I am a little confused. Pru got rid of their sales force back in 2001 and ceased to give advice after that. You say this was 2008. So, Pru would not have given advice. Just information only.

So, did you actually use an adviser? and I dont mean you thinking that the person you spoke to was an adviser but was actually an adviser - i.e. did they do a factfind, needs analysis and issue a recommendation report?