Pension mis-selling in the 90s

dunstonh

As of today the personal pension pot is £54,186

So, a 5% withdrawal rate (which could see it broadly maintain long term value but not expected to make anything) would give £2709 pa income.
£2100 pa. income equates to 3.87%.  So, not dissimilar.
Ignore the annuity projections on statements.   

Brie

As others have suggested contact the PP company and ask for it to be re-evaluated.

I worked for a pension review team and when the review was wound up it was acknowledged that there would need to be records to show what had been done well into the future to deal with further inquiries.  I think they were considering those who didn't respond to the correspondence or couldn't be contacted but it's sensibly that they should at least consider your questions.

Albermarle

I'm not saying you are wrong in your last sentence but I'm inclined to entirely disagree. I think the onus should have been on the PP provider to do what was necessary rather than it being left to an inexperienced investor to try and make the best of a bad situation they created. T

A PP provider would not be able ( or allowed) to make investment decisions on an individuals pension. That would always be up to the individual or their financial advisor if they have one.

If the individual does not make any decisions then normally the provider invests the money in their default fund and it will stay there . This is not necessarily a bad thing because most investors have no idea what to do anyway . However default funds by their nature are somewhat middle of the road in performance.

Probably the fault is more than this was maybe not fully explained  , or understood at the time .

Thrugelmir

NSG666 said:

Thrugelmir said:

NSG666 said:

dunstonh said:

Wind on to today, and the value of that pension pot will no where near buy the income that she would have had by being in the DB scheme. I don't have the exact figures but lets say 7 additional years in the DB scheme would have increased her monthly income by £200 but the value of her insurance pension pot would only buy an annuity paying £100/month. I think that's good grounds to be able to go back to the insurance company and say I want more money putting into the pot or, better still, you take the pot and just pay £200/month.

The redress was to put her back in the position she would have been had the advice not been given.

It isn't possible in some cases to get exactly what you had before if the scheme would not accept rejoining and a lump sum to return benefits.  This means a chunk of the money needs to be invested.  And the redress was based on investments achieving x% pa. and an annuity rate prevalent at the time.

However, things have moved on.  Most people do not buy annuities anymore.   Instead, you have this pot of money you would not have if your wife had not transferred out.   You don't mention the fund value but that is more important than an annuity rate.  That assumes it is an actual annuity rate and you are not using statement projections (which artificially show lower values. Sometimes 5x lower than real world).  So, what is the fund value?

So, actually, you could be potentially better off because of the changes rather than worse off.  Or have options open that you would not have had it remained in the scheme.  Or you could be a lot worse off.

Most redress payments of that era were done on the basis of the person accepting the redress as a full and final settlement.  Meaning you cant go back later and ask for more.   There was one salesforce I am aware of that did do a secondary check at scheme retirement age and could pay more if necessary. But you had to meet qualifying criteria (along the lines of having not transferred your pension away from them during the term, not changed the investments and only at scheme retirement age. Not if you commenced retirement earlier).    So, there is no harm in asking the question but work on the basis of being rejected as a previous settlement was final.

As of today the personal pension pot is £54,186
This is the original scheme investment taken out in 1989 and has not been touched by her since.

There's the crux. 32 years has past since. Unfortunately it's not now possible to say if only I had with hindsight.  

Sorry I don't understand what you mean by this, in their letter dated 1998 it implied that losses would be calculated at retirement.

What did the letter actually state to imply that future shortfalls would be covered? 

NSG666

Brie said:

As others have suggested contact the PP company and ask for it to be re-evaluated.

I worked for a pension review team and when the review was wound up it was acknowledged that there would need to be records to show what had been done well into the future to deal with further inquiries.  I think they were considering those who didn't respond to the correspondence or couldn't be contacted but it's sensibly that they should at least consider your questions.

Hi Brie and thanks. I/she will contact the PP provider, if necessary, when she takes her DB benefits in c.3.5 years time but I guess a lot can happen in that time and we won't no exactly what, if anything, has been lost until then.

NSG666

Thrugelmir said:

NSG666 said:

Thrugelmir said:

NSG666 said:

dunstonh said:

Wind on to today, and the value of that pension pot will no where near buy the income that she would have had by being in the DB scheme. I don't have the exact figures but lets say 7 additional years in the DB scheme would have increased her monthly income by £200 but the value of her insurance pension pot would only buy an annuity paying £100/month. I think that's good grounds to be able to go back to the insurance company and say I want more money putting into the pot or, better still, you take the pot and just pay £200/month.

The redress was to put her back in the position she would have been had the advice not been given.

It isn't possible in some cases to get exactly what you had before if the scheme would not accept rejoining and a lump sum to return benefits.  This means a chunk of the money needs to be invested.  And the redress was based on investments achieving x% pa. and an annuity rate prevalent at the time.

However, things have moved on.  Most people do not buy annuities anymore.   Instead, you have this pot of money you would not have if your wife had not transferred out.   You don't mention the fund value but that is more important than an annuity rate.  That assumes it is an actual annuity rate and you are not using statement projections (which artificially show lower values. Sometimes 5x lower than real world).  So, what is the fund value?

So, actually, you could be potentially better off because of the changes rather than worse off.  Or have options open that you would not have had it remained in the scheme.  Or you could be a lot worse off.

Most redress payments of that era were done on the basis of the person accepting the redress as a full and final settlement.  Meaning you cant go back later and ask for more.   There was one salesforce I am aware of that did do a secondary check at scheme retirement age and could pay more if necessary. But you had to meet qualifying criteria (along the lines of having not transferred your pension away from them during the term, not changed the investments and only at scheme retirement age. Not if you commenced retirement earlier).    So, there is no harm in asking the question but work on the basis of being rejected as a previous settlement was final.

As of today the personal pension pot is £54,186
This is the original scheme investment taken out in 1989 and has not been touched by her since.

There's the crux. 32 years has past since. Unfortunately it's not now possible to say if only I had with hindsight.  

Sorry I don't understand what you mean by this, in their letter dated 1998 it implied that losses would be calculated at retirement.

What did the letter actually state to imply that future shortfalls would be covered? 

Thanks:

"Therefore we offer to guarantee to make good any loss you suffer;
either by buying back lost benefits in the (DB scheme)...... (this wasn't / isn't possible so I've missed the rest of the wording)
or
by ensuring that your (PP provider name) personal pension is large enough when you retire to pay you benefits of corresponding value to to those you have lost"

Thrugelmir

NSG666 said:

Thrugelmir said:

NSG666 said:

Thrugelmir said:

NSG666 said:

dunstonh said:

Wind on to today, and the value of that pension pot will no where near buy the income that she would have had by being in the DB scheme. I don't have the exact figures but lets say 7 additional years in the DB scheme would have increased her monthly income by £200 but the value of her insurance pension pot would only buy an annuity paying £100/month. I think that's good grounds to be able to go back to the insurance company and say I want more money putting into the pot or, better still, you take the pot and just pay £200/month.

The redress was to put her back in the position she would have been had the advice not been given.

It isn't possible in some cases to get exactly what you had before if the scheme would not accept rejoining and a lump sum to return benefits.  This means a chunk of the money needs to be invested.  And the redress was based on investments achieving x% pa. and an annuity rate prevalent at the time.

However, things have moved on.  Most people do not buy annuities anymore.   Instead, you have this pot of money you would not have if your wife had not transferred out.   You don't mention the fund value but that is more important than an annuity rate.  That assumes it is an actual annuity rate and you are not using statement projections (which artificially show lower values. Sometimes 5x lower than real world).  So, what is the fund value?

So, actually, you could be potentially better off because of the changes rather than worse off.  Or have options open that you would not have had it remained in the scheme.  Or you could be a lot worse off.

Most redress payments of that era were done on the basis of the person accepting the redress as a full and final settlement.  Meaning you cant go back later and ask for more.   There was one salesforce I am aware of that did do a secondary check at scheme retirement age and could pay more if necessary. But you had to meet qualifying criteria (along the lines of having not transferred your pension away from them during the term, not changed the investments and only at scheme retirement age. Not if you commenced retirement earlier).    So, there is no harm in asking the question but work on the basis of being rejected as a previous settlement was final.

As of today the personal pension pot is £54,186
This is the original scheme investment taken out in 1989 and has not been touched by her since.

There's the crux. 32 years has past since. Unfortunately it's not now possible to say if only I had with hindsight.  

Sorry I don't understand what you mean by this, in their letter dated 1998 it implied that losses would be calculated at retirement.

What did the letter actually state to imply that future shortfalls would be covered? 

Thanks:

"Therefore we offer to guarantee to make good any loss you suffer;
either by buying back lost benefits in the (DB scheme)...... (this wasn't / isn't possible so I've missed the rest of the wording)
or
by ensuring that your (PP provider name) personal pension is large enough when you retire to pay you benefits of corresponding value to to those you have lost"

Who gave the undertaking? Have you contacted them yet? 

NSG666

Thrugelmir said:

Who gave the undertaking? Have you contacted them yet? 

That was an extract from the PP provider's letter in 1998 which contained the agreement that she had to sign. Not contacted them yet as she won't be looking to take any benefits until 2025. A lot can happen between now and then but I posted as I couldn't find anything when trying a search on MSE forum and thought it would be something that would have cropped up before.

Thrugelmir

NSG666 said:

Thrugelmir said:

Who gave the undertaking? Have you contacted them yet? 

That was an extract from the PP provider's letter in 1998 which contained the agreement that she had to sign. Not contacted them yet as she won't be looking to take any benefits until 2025. A lot can happen between now and then but I posted as I couldn't find anything when trying a search on MSE forum and thought it would be something that would have cropped up before.

Then presumably they'll honour the committment and purchase an annuity that will provide the same level of income as the DB pension would have provided. If there's a shortfall in the value of the fund at the time your wife decides to retire (i.e. scheme age or earlier).  If the value of the fund exceeds the purchase cost of an annuity then no further action would be required on their part. Until retirement age is reached there's too many variables to make any definitive assessment now. 

pensionpawn

I was also awarded compensation through the miss-selling of pensions and my time frame is almost identical, 1989 - 1996. I was awarded ~£20k in 2001 which almost doubled the value of my personal pension at that time and was considerably more than a years salary on leaving my first company in 1996. Given the growth rate of that fund, untouched since 1996, that £20k compensation is now worth a healthy amount in my SIPP and from some very crude assumptions and simple arithmetic is now probably worth about 9 years of the equivalent DB pension. I have no complaints with my situation.