Pension Pot Reduced to £100

Pension20

I invested £2000 into a pension over 20 years ago.  I paid into it for just the first year or so and it has been sat there ever since.  I have recently reviewed the performance of all my pensions, and this one is now worth £100!!  Thanks (I guess) to pension charges.  Is this normal?!  I would have been better off putting it into a bank!  Is there any action I can take to recover the money?  (The company concerned have rejected my complaint, and the financial ombudsman won't consider it as it is an 'old' complaint....which baffles me given that the pension has not been closed, and I still receive annual statements.  Surely all pensions are live until they are claimed or transferred??).  Advice appreciated

Keep_pedalling

It is almost certainly due to commission charges, which would have been front loaded and eaten up nearly all your investment as you only contributed for a very short period. Regulation is much changed since you took out that pension, but those commission payments were allowed then so you have no real chance of making a successful claim.

Albermarle

and I still receive annual statements.  

So you would have known about the reduced value for some time?

dunstonh

Thanks (I guess) to pension charges.  Is this normal?

Normal for the era but not today.

Back then, the cost of setting up was spread over a period.  Today, it can be spread for no longer than 12 months.  The costs were higher back then too.   So, the bulk of that £2000 would have been spread over a number of years (typically anything from 2 years right until scheme retirement age.

The ways they did it varied. Capital and Accumulation units would see one retained as yours but the other drain away to pay the charge.   Others had a higher annual charge for x years.

 I would have been better off putting it into a bank! 

Yes.  However, the pension you set up assumed you would be paying for longer than a year.   You didn't fulfil your side of the contract.

 Is there any action I can take to recover the money? 

no.  You were notified this could happen at point of sale. It would have been on the initial illustrations and again with the cancellation rights.  There would have been a warning that ceasing to pay in the early years could see you get little or nothing back.

The company concerned have rejected my complaint, and the financial ombudsman won't consider it as it is an 'old' complaint....which baffles me given that the pension has not been closed, and I still receive annual statements.  

It is unlikely they said it was an old complaint (as its not).  It is more likely they would have referred to time bars.   Such as the need to complain within 6 years of the sale or 3 years of being reasonably aware of an issue.  The only time "old complaint" comes into it is you have previously complained about it and failed to refer it to them within 6 months.

In reality, there is no complaint here.   Effectively you paid for someone to set up a pension but only paid in enough to cover their bill and just a tiny bit more.  If you had paid in for longer, then you would have gone past that point and this would be a non-issue.

Marcon

Pension20 said:

I invested £2000 into a pension over 20 years ago.  I paid into it for just the first year or so and it has been sat there ever since.  I have recently reviewed the performance of all my pensions, and this one is now worth £100!!  Thanks (I guess) to pension charges.  Is this normal?!  I would have been better off putting it into a bank!  Is there any action I can take to recover the money?  (The company concerned have rejected my complaint, and the financial ombudsman won't consider it as it is an 'old' complaint....which baffles me given that the pension has not been closed, and I still receive annual statements.  Surely all pensions are live until they are claimed or transferred??).  Advice appreciated

The answers above confirm that there isn't action you can take, but did want to (a) add a word of sympathy - I suspect many people with 'elderly' personal pension contracts could be in the same boat' - and (b) flag to anyone else who took out a personal pension last century to check carefully how their charges are structured. Flat monthly charges, rather than charges relating to a %age of the fund value, were very common, and quickly whittled away the pot value, especially if someone stopped contributing and the starting figure was very small.

Anyone with a (small) SIPP, even a relatively recent one, would be particularly well advised to check the charges they've agreed to, since the sting in the tail there is that you can find yourself on the hook for paying charges even after the pot has run down zero.