Pension management fee wiped out investment

Admiral_04

My father had a pension fund sold by Zurich many years ago, after being made redundant he stopped paying into it.
Over the years the management fee has been greater than the invested return, a few months ago he received a letter from Zurich to advised that the balance of the fund was now £0 and therefore the fund was closed.
Is there any recourse to ale against Zurich for excessive management charges? Would he be likely to get any refund?

mania112

Afraid not, unless it was mis-sold somehow?

dunstonh

Is there any recourse to ale against Zurich for excessive management charges?

No.

Would he be likely to get any refund?

No.

Pensions of 20 years ago typically had charges that required you to make contributions for more than a couple of years. If you failed to do so then the fees would continue until the fund was eroded. The warnings issued at the time were very common back then although you rarely see them nowadays as for the last 15 or so years, pensions havent been set up that way. (nor have all the other products that used to be set up that way too).

It is unlikely that it would be mis-sold as there is at point of sale, the seller would not have been made aware of the redundancy. On the plus side, the pension would have been virtually worthless anyway as it would have been less than a handful of years contributions.

doughnutmachine

Admiral_04 wrote: »

My father had a pension fund sold by Zurich many years ago, after being made redundant he stopped paying into it.
Over the years the management fee has been greater than the invested return, a few months ago he received a letter from Zurich to advised that the balance of the fund was now £0 and therefore the fund was closed.
Is there any recourse to ale against Zurich for excessive management charges? Would he be likely to get any refund?

tbh, i wouldn't be hopefull of getting anything.

it might be doing a service to the MSE community if you said how much your dad had contributed over the years? i have to admit that high charges by the financial industry does annoy me.

dunstonh

i have to admit that high charges by the financial industry does annoy me.

Dont mistake modern plans with those priced for the boom/bust high inflation economy of 20 years ago.

it might be doing a service to the MSE community if you said how much your dad had contributed over the years?

It would as chances are it is less than 2 years worth and the contributions from that period tended to be around the £10-£50pm mark. Being Zurich now probably means its an ex Allied Dunbar policy and they were never known for being cheap. Ironically, they can have near non-existent annual management charges but were heavy on initial charges. Most of the early years would go on capital units which would erode over time to end up at zero. If it never got into the accumulation units stage then it was effectively worthless the minute the pension was stopped and never restarted.

admiral_04_2

dunstonh wrote: »

Dont mistake modern plans with those priced for the boom/bust high inflation economy of 20 years ago.



It would as chances are it is less than 2 years worth and the contributions from that period tended to be around the £10-£50pm mark. Being Zurich now probably means its an ex Allied Dunbar policy and they were never known for being cheap. Ironically, they can have near non-existent annual management charges but were heavy on initial charges. Most of the early years would go on capital units which would erode over time to end up at zero. If it never got into the accumulation units stage then it was effectively worthless the minute the pension was stopped and never restarted.

There was only about £700 a few years ago when he mentioned this to me and yes it was an Allied Dunbar policy.
I know it's not a huge amount of money but its the fact that its all gone through charges that is somewhat upsetting him, he's never been a lover of the money industry at the best of times.

dunstonh

I know it's not a huge amount of money but its the fact that its all gone through charges that is somewhat upsetting him, he's never been a lover of the money industry at the best of times.

If he wasnt a lover of the money industry he would never have bought from the most expensive distribution channel with one of the worse sales reputations going They didnt call them allied crowbar for nothing!

Realistically, it was a product of its time. Looks awful by todays standards but quite the norm back then.