Barclays pension - employment insurance

peasepud

Firstly, apologies for the lack of full info but I've only just heard about this and am after some initial advice.

Since going self employed 30+ year ago my father paid £100 per month into a Barclays Pension fund. At the time of taking it out both he and my mother clearly remember making it clear that he did not want or need the additional employment insurance.

When the time came for the policy to pay out he was quoted an amount way below what he had been told at the time and the reason given was that £40 or so of his monthly payment was taken by the insurance and therefore he had only been paying approx £60 per month towards the pension.

Being the kind of people my parents are they accepted this, my father has since passed away and now the policy is paying only £33 per month to my mother.

Does anyone know if this is a PPI type of thing? Is it something others have fought or is it possible my mother hasn't quite got the facts correct?

I don't want to go raking stuff up if it's for no purpose but will happily get the full details of the policy dates etc if people think there's a chance of mis-selling here.

Many thanks for any help you can give


Peter

Nearlyold

Pensions don't have PPI, they can have waiver of premium but the cost would have been about £5 or £6 per month tops for a total premium of £100. He could have had life cover attached to the pension, you need to get the policy details otherwise its just guesswork

[Deleted User]

peasepud wrote: »

Does anyone know if this is a PPI type of thing? Is it something others have fought or is it possible my mother hasn't quite got the facts correct?

It's definitely not PPI or any kind of unemployment cover, as pensions don't have such policies. Being self employed won't have affected this.

The only way to be sure what it actually is would be to examine the actual policy or contact Barclays.

dunstonh

and my mother clearly remember making it clear that he did not want or need the additional employment insurance.

Pensions do not have employment insurance on them. So, it seems strange that she recalls a conversation about an option that is not available.

They do have waiver of premium but that is about sickness.

Does anyone know if this is a PPI type of thing?

Its not PPI. Not even close. PPI is accident, sickness and unemployment cover for short term (typically 12-24 months). It is issued by general insurance companies typically to cover debt. Waiver of premium is long term insurance (comes under a different part of the FCA rulebook) issued y life assurance companies. It only covers sickness and would pay the pension for the whole remaining term if required.

the only other bolt on you could get with pensions was pension term assurance (life cover).

Is it something others have fought or is it possible my mother hasn't quite got the facts correct?

Your mother's recollection is a bit off. Not unexpected given the timescale. He probably had waiver of premium as she thinks but the premium on that tended to be around 2.5%-5% of the pension contribution (so about £2.50-£5 pm) and back then, it got tax relief on that too. It would not be possible for waiver to cost 40% of the contribution. She may be getting tax relief mixed up as pre 1988 pensions didnt get tax relief at source like they do today. It was claimed back via the annual tax return. So, someone paying £100 back than say £100 go into the pension. Whereas today, someone paying £100 in would get £125 going in (if basic rate taxpayer - more if higher rate).

Your father probably get less because of multiple reasons
1 - life expectancy - people living longer meant annuity rates fell over the years (they are about 1/3rd of what they used to be)
2 - investment returns lower. You used to be able to quadruple your investments in 10 years. Now you are lucky if you can double.
3 - inflation. People do not top up regularly. You still see that today. They started at £30pm in 1988 (which was a lot back then) but its now peanuts. By not keeping payments up with inflation, you get less than expected.
4 - Sounds like they bought the in-house option rather than using an IFA for the open market option (which is nearly always better).