Inadvertently triggered MPAA

Albermarle

I am also not sure how it works with IFA indemnity insurance, but in the industry I was in the policies had a large excess, so nearly all claims were settled without a loss adjuster getting involved.

Marcon

Albermarle said:

I am also not sure how it works with IFA indemnity insurance, but in the industry I was in the policies had a large excess, so nearly all claims were settled without a loss adjuster getting involved.

Same way as other PI policies - the excess will be agreed (and the premium based) on the terms agreed between the firm in question and its insurers. They should report the incident even if they don't intend to claim.

dunstonh

For a basic taxpayer (pre-retirement and post-retirement), in terms of money in and money out, the difference between an ISA and a pension is an extra 6.25% on the contributions.  It doesn't need an actuary in that respect.

ISA is next in the pecking order and the likely alternative.  

So, if you were intending to put in £10,000 above the MPAA, then the adviser would need to pay £625 to make up the difference between tax relief and tax.    ISAs and Pensions have the same investments and same charges.  So, there is no difference there.   It would be just a one off payment per contribution.

However, you say you had limited savings and would have used a loan.  So, those two bits indicate that a) the amount over the MPAA is unlikely to be a lot and b) you would have paid interest on the loan at a rate that was higher than the returns have been since 2001.

It could be that you are not actually worse off as the money taken out in 2021 would have lost value over 2022 and loan interest could have been greater than the net effective relief received if you paid into the pension and any extra funds you now have to pay into the pension could have gone to repaying that loan.     
 e.g. if you went £10k above the MPAA then without cost of loan and investment losses, that is £625.   However, a 15% loss over 2022 on £10k is £1,500.  

So, if you push for an actuarial outcome, you may find you get little or nothing.

In terms of the adviser PI insurance, these tend to have an excess between £2,500 and £5,000.  An adviser may look to put things right without involving the PI insurer when it's less than the excess as they are going to end up paying it anyway, but it is unlikely when it is above the excess.       It is also possible that the PI insurer will dig deeper into your documentation and instruct that the complaint be rejected.  Hypothetically speaking, if you have recently taken the 25% out, there would still have been warnings on the MPAA (mainly in highlighting the options and why UFPLS was not used) and you acknowledge these were given.

Or the more likely outcome that they accept that the complaint is upheld but the redress calculated to include the cost of a loan and/or investment losses over 2022 which may result in little or nothing being paid.

Realistically, how much over the £10k MPAA are you likely to be each year between now and retirement?
6.25% uplift on that is your probable maximum but if you go too high or start saying you would be making unrealistic pension contributions above the MPAA, then the more likely it will end up with the PI insurer.

QrizB

Considering that the OP is 57 now, SPA is 67 so that's ten years.

If (for example) they can show that they were planning to contribute £20k pa to their pension for the next 10 years, they might expect to be offered £6250?

dunstonh

QrizB said:

Considering that the OP is 57 now, SPA is 67 so that's ten years.

If (for example) they can show that they were planning to contribute £20k pa to their pension for the next 10 years, they might expect to be offered £6250?

Yes.   Although at that level, the adviser is likely to refer it to their PI insurer.
However, the OP says in post #1 that there is limited savings (i.e. virtually none as a loan would have been required as an alternative funding method).   So, the question may be asked whether £20k pa pension contributions are realistic for someone with limited savings.

Plus, when the OP started the thread, the MPAA was £4,000.  it is now £10,000.   So, they may not even be over the MPAA any more.     Hopefully, the OP will give us an indication of the pension contributions.

Dazed_and_C0nfused

This was from the very first post on this thread,

I am 56 and currently paying £9,000 pa into my workplace pension including 10% matched contributions from my employer. 

Helenadviceplease

I can see all your latest points are very important - thanks again Roger & Marcon. 

I need to have an idea of what settlement I should be looking for before meeting him - if I decide to- so will definitely be seeking advice. 

I just have no idea how long I’ll be working and I could have wanted to put a lot into my current pension. 

Now to find a good IFA!! 

Pat38493

Dazed_and_C0nfused said:

This was from the very first post on this thread,

I am 56 and currently paying £9,000 pa into my workplace pension including 10% matched contributions from my employer. 

Typically many people would ramp up their pension contributions as they get closer to retirement - I would have thought this should be taken into account.

Albermarle

Helenadviceplease said:

I can see all your latest points are very important - thanks again Roger & Marcon. 

I need to have an idea of what settlement I should be looking for before meeting him - if I decide to- so will definitely be seeking advice. 

I just have no idea how long I’ll be working and I could have wanted to put a lot into my current pension. 

Now to find a good IFA!! 

An IFA or other professional will charge you of course, and your IFA may just turn it all over to their insurers if they think you are gearing up for a fight. That could mean a long road of paperwork , e mails, questions and with no guaranteed result.
Personally I would be tempted to take the money and run, if they offered a few Grand.

Helenadviceplease

Thanks everyone. Interesting to get your different perspectives. 

I have since had a significant promotion and pay rise (25% in the past 2 years). Plus my daughter has only 1 more year at uni. 

I have increased my pension contributions and am also getting increased employer contributions. I am planning  on working for at least another 5 years and yes, was hoping to ramp up my contributions significantly after daughter leaves uni. 

I would like to pay someone to give me a realistic figure of what my losses would be after 5 years so I can decide whether the offered settlement is worth accepting. But I don’t know who to go to.