Have I got a case?

vdubstar

Dear all,

I know nothing about pensions so please bear with me. I'm just starting to sort out my pensions and have a couple of questions. In 1987 or 1988 (aged 17 or 18) a very nice man from the prudential came to my house (I lived with parents at the time) I remember him going on about pensions using using words such as 'opting out' SERPS etc...I did not have a clue what it was about at the time and was not concerned about pensions but I signed a piece of paper because he persuaded me it was the right thing. In 2000 i think it was there was a review of my case and I was told I had been wrongly advised and that there was a short fall of about £2! I didn't sign anything to say I agreed with the results as I was concerned that I had made such a serious decision at such a young age ( I thought you had to be 21?). I attempted to discuss this with the pru to no avail.

I am still 'opted out' and have an annual statement. I am going to get some advise about pensions through my new employer. I suppose my question is...was I too young to make this type of decision.

I would appreciate any help

Regards,

Vikki

Retired_I.F.A.

When you opted out you should have had an illustation which basically showed the serps pension you would get if your wages remained as they were then plus inflation compared to the opted out rebate invested in a personal pension where two potential pensions were quoted, one where the assumed growth was 1/2% and the other at 2.5% greater than inflation. I'd say it's an odds on bet opting out even with the heaviest charging pension provider was on paper the right choice as the only ones where opting out illustrations showed less than serps were folks in their 50's.

At 17/18 chances are you were paid less than you are now after taking into accont inflation so the two comparative figures even though they were in values then would in reality be higher as the rebate would have been linked to your actual earnings.

Unfortunately now they are saying in todays terms assuming x (whatever the assumptions being used today are see footnote *) your actually very slightly worse off. The reason for that is two fold, firstly interest rates inflation and investment returns are nowhere near as high as they were in the late 80's and as is most likely your rebate went into with profits investment.

The sheer number of bogus misselling claims many of which have been upheld by the regulators has led to compensation being paid out mostly from these with profit funds to claimants and has all but killed off with profits as an investment choice as its not the companys owners that have paid compensation it's come from the policyholders with profit funds.

Bottom line is you probably did right by contracting out, and were advised to correctly and yet you have a good chance of jumpimg on the compensation bandwagon and winning something at the expense of all other with profit plan owners. Madness eh?

Go take advice from an IFA regarding what to do now not your employers or the Pru over the phone as they are neither qualified or allowed by law to give advice.

*Bear in mind i've been out of the industry 5 years or so now and am not up to date with the current rules etc. A currently pacticing IFA preferably with G60 qualifications will be.

"Was I too young to make the decision at 17?"

I dont think so, assuming it was explained to you properly and you had a written illustration to remind you in the years since then it was a decision an 11 year old could have made.
If you can show you were never given an illustation or any "reason why letter" then yes it was missold, even so it was not bad advice.

EdInvestor

vdubstar wrote: »

In 2000 i think it was there was a review of my case and I was told I had been wrongly advised and that there was a short fall of about £2!

It would thus appear that you were missold but the case has been reviewed and redress has been added to your plan already, albeit your loss was small.So the matter has been dealt with.

dunstonh

Since 2000, the shortfall has probably been replaced and is in surplus now. Most contracted out cases swung from being 100% better off in 1996 to almost all worse off in 2001/2 to being 50% better off in 2005 to 2/3rds better off in 2007. Unfortunately, the way people think nowadays is too short term and they forgot investments were long term.

Prus with profit fund is strong and is probably only one of two that are still worth considering.

Pru no longer employ advisers and are unable to offer opinion or advice. This is why communication with them will be limited.