Pension pot 'frozen' and dropping like a stone

dollyponduk

A friend of mine who will be 70 this year has an occupational pension of approximately £6,000 per annum. He invested in another pension with a company and in 2012 this pot was worth £39,000 having lost money. He enquired about drawing it out at that time as it was losing money and the company suggested he was better off leaving it as it could/would regain losses if he was patient. Now we are in 2015 and it is worth £25,000. He is livid and they are suggesting it should be left longer to regain its losses. He said enough was enough and as it was now under £30,000 he should be entitled to withdraw it before the new changes in April. He filled in a form with them to do just this. Their response is to deny him access to it as he has an occupational pension of £6,000 taking the total over £30,000. Can they do this? Will they still be able to do this come April, when doubtless they will have managed to lose even more of it? Can they be taken to some kind of ombudsman for neglect? Any advice would be very gratefully received.
Many thanks
Angela

dunstonh

He is livid and they are suggesting it should be left longer to regain its losses.

Is this a mainstream genuine pension product and investment arranged through regulated companies or is it one of the scam/dodgy schemes that invests in dodgy areas like Spanish property, biofuels, eco energy etc arranged with unregulated companies?

Their response is to deny him access to it as he has an occupational pension of £6,000 taking the total over £30,000. Can they do this?

Yes they can as he does not quality for the under £30k triviality rule. His occupational pension takes him way over the triviality limit. He can wait until april and do it though as triviality wont apply in the same way then.

Can they be taken to some kind of ombudsman for neglect?

Depends on whether it is a regulated company and investment or not. We need a bit more detail.

atush

If this was a real investment and not a scam, he can do 2 things. He can leave the money there, but change the investment. This would mean the Loss would be crystallized ie made permanent. But at least it should not drop further if it is invested in a cash product.

2, he can transfer the pension now away from this form to another. Where he can draw it as he wishes from april this year. he may not want to all at once though, due to tax.

If it is a genuine investment, and he was advised into a riskier investment than he should have had, he can file a complaint against the advisers.

dollyponduk

Thank you very much for the quick replies. I will ask him for more information, but suspect it is not a scam investment as he is a very sensible hard working man.
Many thanks
Angela

dunstonh

but suspect it is not a scam investment

Although it should be of concern. Markets fell in 2007-2009 but since then virtually all asset classes have gone up (some by a large amount).

atush

Wouldn't be the first time that hard working sensible people were taken advantage of.

At the very least the investment sounds unsuitable. I'd have him ask for a copy of the report they did on his attitude to risk re: suitablility of this invesment.

Linton

dollyponduk wrote: »

A friend of mine who will be 70 this year has an occupational pension of approximately £6,000 per annum. He invested in another pension with a company and in 2012 this pot was worth £39,000 having lost money. He enquired about drawing it out at that time as it was losing money and the company suggested he was better off leaving it as it could/would regain losses if he was patient. Now we are in 2015 and it is worth £25,000. He is livid and they are suggesting it should be left longer to regain its losses. He said enough was enough and as it was now under £30,000 he should be entitled to withdraw it before the new changes in April. He filled in a form with them to do just this. Their response is to deny him access to it as he has an occupational pension of £6,000 taking the total over £30,000. Can they do this? Will they still be able to do this come April, when doubtless they will have managed to lose even more of it? Can they be taken to some kind of ombudsman for neglect? Any advice would be very gratefully received.
Many thanks
Angela

To have a pension pot of £39K in 2012 drop to £25K now seems rather difficult to do if invested sensibly. Until there is clear information on what investment this is I would be suspicious.

Under current rules one can only withdraw all of a £30K pension pot as cash outside a pension if this was the only pension the person had including those in payment. So the company are correct in saying that he cant. This changes in April. However even when the rules change pension companies may choose not to provide the facility. But there should be nothing stopping him moving the pension elsewhere to a pension company which does allow him to withdraw the money after April, if that is what he wants to do.

Perhaps transferring elsewhere now is the way to go anyway. But lets see more details about the current pension first.

dollyponduk

Since posting at the weekend my friend has been round with a stack of paperwork wrt this investment as well as additional facts. I have scanned a small selection of these papers and placed them here:
s284.photobucket.com/user/dollypond99/library/?sort=3&page=1

I hope they are visible publically! I read the risk assessment questionnaire qpg1-5 and thought oh well it looks like he said he was an adventurous investor, but it's funny a lot of the answers have been changed so I asked him about this. Apparently he filled in what he could with his wife. They then went to a meeting with three other people who persuaded him to change a lot of his answers. He had said he wanted lowish risk and they told him he'd never get his money back if he took no risk so he was convinced to take a slight risk. I can see the document is in biro and is original as there are biro impressions. There are obviously no initials by any changes so I do not know who made them but the tick sizes are larger.
Incidentally the question which made me laugh was was number 3 where he'd clearly said his experience with HBS fell short of his expectations and he was persuaded somehow to change it to having exceeded his expectations!!!

Apparently on being made redundant aged around 47 he was put on the £6k occupational pension with no lump sum and went self employed. He paid £120 a month into the SIPP from 1991 via the advise of an accountant at that time. He also had another type of investment with them which was not a pension and money inherited from his father etc went into this. He calculates each half ended up £14k down on it's all time high and he has withdrawn the investment half but the SIPP still sits losing money and he has been refused the right to withdraw it. (It was 39k in 2012 and is now 25k) Hopefully if nothing else he might get it in April.
However any advise as to what to do in the meantime would be gratefully received and another fee is due to this company in March. He had been assured there would be no fees if it was losing at the start but there seems to be justification for fees every year.
Thank you for your patience in reading this,
kind regards
Angela

mania112

So they were cautious and were told to increase their attitude to risk to fit the criteria for the investment.

A decent Adviser would happily accept their cautious risk and put them with an appropriate fund. The fact this hasn't happened starts to make you wonder why?

12% fee for any growth beyond 10% per annum is extortionate/criminal.
They also base the fund on circa £62k, where's this gone?

Linton

I have just looked at the list of investments and am shocked. Surely the OPs friend must have a case for gross mis-selling. Not even a rational but wildly high risk investor would put all their money in something like this.

Summary (from the Jan 2012 account):.....

29% Central Fund of Canada - Canadian company investing in gold/silver bullion
19% Cash
14% Gold Trust Gold Shares: I think a US gold tracking ETF
10% Silvercorp Metals Inc: Canadian silver miner
There seems to be a US/Canafdian class action fraud case in progress against Silvercorp.
7% Market Vectors Agribusiness ETF
etc etc

Why all in the US/Canada? Why almost all in precious metals? It seems to me that the friend is lucky to have not lost a great deal more. Suggest professional/legal advice is called for, and not from his IFA.

gadgetmind

Wow, if this a regulated company? Defending that investment mix could be somewhat difficult even for the most gung ho investor!

Is this HBS the bank, as in HBOS?