Mis Sold Pension?

Hargreaves1910

In the 80's I worked for a large supermarket chain and decided to take out a private pension which I did with the old Brittanic. Each year they would do a financial review and recommended I increase my payment into my pension. However they said I could not just increase the payment into my already opened account but would have to start another pension account. Eventually I ended up paying into three separate pension pots all running side by side.
I often wondered about the legality of this and was sure I was being conned.
Can anyone enlighten me please? Surely by having three separate accounts I was paying a lot more commission and management charges than if I was just paying into one plan.

ViolaLass

Why not find out the charges first before getting outraged?

dunstonh

However they said I could not just increase the payment into my already opened account but would have to start another pension account

Very common in that period and for good reason.

Eventually I ended up paying into three separate pension pots all running side by side.

Again quite normal.

I often wondered about the legality of this and was sure I was being conned.

What exactly do you think is wrong with that?

Surely by having three separate accounts I was paying a lot more commission and management charges than if I was just paying into one plan.

1 - you do not pay commission. You pay charges.
2 - the most common reason for going into new plans is that the v2, v3, v4 was cheaper than the version you had or was no longer available.

in 1988 you could no longer top up retirement annuity contracts. Personal pensions replaced them. So straight away you two contracts if you straddle either side of that.

Then over the 90s, charges came down consistently. So, providers would launch new cheaper versions. Your increment would have generated a commission whether it was to the old plan or the new one. Between 88 and 98, providers had typically gone through 4-5 versions.
By 1998, you had the stakeholder friendly requirement where providers knew what was coming and had to comply with the incoming rules early. Then in 2001 you had stakeholder launched which made personal pensions no longer suitable to top up. By 2005 personal pensions fought back and were starting to come in cheaper than stakeholder. By 2009, you had pre-RDR contracts and then 2012 onwards you had post RDR contracts.

Greeniron

If the large supermarket chain offered an occupational pension scheme it might be that you should have been directed to join that rather than taking out private provision, especially if you worked there for several years. This should have been considered each time you were advised to increase your premiums.

PeacefulWaters

I often wondered about the legality of this and was sure I was being conned.

And yet you went with it? Ok.

Hargreaves1910

ViolaLass. Outraged? No I don't do outraged.

dunstonh. Thankyou so much for a very clear and concise answer to my question. That was all I wanted to know and you have answered it admirably.

GreenIron. They did have their own occupational scheme but it was non contributory. The union asked for years if they would change it to contributory but they wouldn't. It was the company who brought Brittanic in after consultations and they allowed everyone time off during the working day to talk to them. I'm not knocking the works pension, I did ok out of it. At the end of 20 years service I got a £20k pension that I hadn't paid a penny into but everyone wanted to be able to pay into a scheme.

PeacefulWaters. Yes I did, everything was set up correctly and I had a pension I could pay into. It wasn't until I had my annual reviews when I wanted to pay more that I thought it odd I had to start another pension and the agents used to turn up at my house in sharp suits and sparkly new BMW's. But as dunstonh has now clearly explained above in those days it was standard practice. And don't forget there were no smartphones or tablets back then that I could check to get a quick answer. I was a normal working bloke trying to do the best for my family and also save for the future.

I did ok, I'm not rich but I made sure that when I retired a couple of years ago I had no debts and my mortgage was paid. And those extra pension pots made the difference between an ok retirement and a miserable one.

Number75

Miserable retirement on £20K a year that you never had to contribute towards, for a 'normal working bloke'? For only 20 years service? We should all be so lucky! Don't think I'd be miserable with that, but can't knock you for choosing to save more in a private pension to have an even better retirement.

dunstonh

Just to add that today, thankfully, version numbers are mostly a thing of the past. Modern software coded systems and contracts allow adjustments that the old hard coded software systems cannot. So, this versioning is very much a thing of the past with most providers (but not all).

BobQ

Number75 wrote: »

Miserable retirement on £20K a year that you never had to contribute towards, for a 'normal working bloke'? For only 20 years service? We should all be so lucky! Don't think I'd be miserable with that, but can't knock you for choosing to save more in a private pension to have an even better retirement.

I think you are being very harsh. Besides in those days many employers provided non-contributory or low contributory pensions that paid good pensions. In most cases the pension was seen as an additional benefit and saved firms having to pay higher salaries. I recall when I left school, for example, people were keen to get jobs with banks and insurance companies to qualify for generous pensions and low cost subsidised mortgages. The public sector is often accused today of having gold plated pensions, but in those days lots of private sector firms offered gold plated pensions.

dunstonh

I recall when I left school, for example, people were keen to get jobs with banks and insurance companies to qualify for generous pensions and low cost subsidised mortgages.

I also remember the scrutiny that staff were put under. All transactions checked on their current account. They were not allowed a bigger house than their supervisor/manager and could not borrow the same multiples that a retail customer could get. They were forced to have their lending with their employer.