Pensions miss selling cases?

Tight_Fart

Are there cases of miss selling for pensions?
Back in approx 1992 I wanted a mortgage for a light industrial unit, I banked with Barclays and they recommend a pension
linked mortgage with Scottish Widows, it was a case of take this product or don’t get a mortgage with us.
Rough figures at the time were £65k property £50k interest only loan, £125 pcm pension. Me aged 32.
At aged 60 (1year away now) the pension would repay the £50k and leave me with a small pension (what could go wrong)
Now it doesn’t look like it would make that payment.

Keep_pedalling

After 32 years you will have paid £42k into your pension and it would need to have grown to £200k to enable your 25% lump sum to pay off your mortgage. This would never have been a guaranteed sum.

I don’t think you have any sort of claim and from your annual statements you should have been aware a long time back that there was going to be a shortfall.

Dox

Google on 'pensions mis-selling' to get your answer...but your case is rather different. You had a choice: take the mortgage and the SW pension, or go elsewhere for your mortgage.

You'd almost certainly have faced the same issue (a shortfall) with any sort of endowment mortgage. Again, google for any number of examples!

Tight_Fart

Thankfully I did change the mortgage some years back, probably when the indowment fiasco started,
but I always felt miss sold the product.

Aegis

Your single biggest hurdle for getting a successful complaint registered via the Financial Ombudsman Service will bet time-barring. You have six years from the point of sale to make a complaint, which has expired. For long-term products where the issue might be hidden for years, you have three further years from the point at which a reasonable person ought to have become aware that there was a potential problem. Barclays will likely claim that you received a pension statement at least annually, which would show projected values at retirement based on certain assumptions of future growth rates, and can therefore claim that a reasonable person would have known about this ages ago. They can then argue that you had plenty of opportunity to make changes to your strategy, to increase your contributions, or to plan to extend the term to allow the mortgage to be repaid at a later date.


Looking at a mortgage calculator to see how much you would pay on capital repayment instead, it looks like the amount in question would have been about £149 per month to clear the capital in 28 years. This is a little more than what you paid to the pension, so the question is whether you are better off now. If the pension is worth more than £50,000 NET (i.e. after tax) then you have sufficient to pay off the mortgage and potentially leave a small excess, plus you paid less over the term of the mortgage than you would have done on pure capital repayment.


On this basis, do you think you have valid grounds for complaint (i.e. are you materially worse off than you would have been without this product?), and if so what is it?

dunstonh

£50k interest only loan, £125 pcm pension. Me aged 32.
At aged 60 (1year away now) the pension would repay the £50k and leave me with a small pension (what could go wrong)

In 1992, the basic rate of income tax was 25%. So, £125pm net would be £166.67 gross.
28 years of £166.67pm is £56,001 (if you were a higher rate taxpayer then you would have even more tax relief)

You needed 25% of the value to get £50k. So, the pension would need to have grown to £200k. That is a requirement of 7.80% p.a. annual return average. This is high by today's standards but well within returns expectation back in 1992. You have probably earned something around 6% p.a. which would put you closer to £144k.

Because of the changes in 2015, you can draw the whole pension if you want. Not just the 25%. So, with the monthly repayment being similar, you are probably better off. Even though it hasnt done as much as planned.

What is the pension currently worth?
Did you keep the monthly premiums going?
Did you increase them at any point to keep up with inflation? (e.g. £125pm net in 1992 is a very good contribution but in 2019, its at the low end).

mgdavid

Tight_Fart wrote: »

Thankfully I did change the mortgage some years back, probably when the indowment fiasco started,
but I always felt miss sold the product.

Did you change it while staying with Barclays or did you go elsewhere?
We had an endowment mortgage with Barclays, taken out in the early 1980s. Some time in the mid-90s Barclays approached us and offered to convert it back to a straight repayment mortgage, and put us in the position as if it had been a repayment one from the outset. This effectively compensated us for the mis-selling even though I did not make a complaint to get it.


I'm wondering if you jumped ship prematurely? Still, only really of academic interest now, it was all too long ago.

Tight_Fart

Thanks for all the above advice, I’ll drop my dream of millions in compensation.

The pension of £125 was the gross figure so I’ve only paid around £100 net a month, yes I’ve kept the payments going ( and cleared the loan some years back)
The fund only shows a value of around £80k now, it’s performed very poorly over the years, still only £1100 to pay in now.

ffacoffipawb

Tight_Fart wrote: »

Thanks for all the above advice, I’ll drop my dream of millions in compensation.

The pension of £125 was the gross figure so I’ve only paid around £100 net a month, yes I’ve kept the payments going ( and cleared the loan some years back)
The fund only shows a value of around £80k now, it’s performed very poorly over the years, still only £1100 to pay in now.

If it is with profits there may well be a nice terminal bonus payable on maturity. This could well double the payout on such a long duration policy.

Is it with profits or unit linked?

Tight_Fart

I think it’s unit linked.

Dox

Tight_Fart wrote: »

I think it’s unit linked.

Maybe check? Might be a nice surprise!