Guaranteed Minimum Pension - how big?

hogweed

Back in 1992, I was conned by an IFA into transferring 2 “frozen” final-salary schemes into Personal Pension Plans with one of the big providers – at great cost to myself. Yes, I've appealed to the Financial Ombudsman etc – but their attitude is that the IFA carried out a review which said he did nothing wrong, and hey – we all know IFA’s tell the truth, so I have no case to answer.

Anyway. I’m desperately trying to understand what I’m left with now. I have 2 policies, each of which has a portion of “Reserved Units”, which I understand will provide a Guaranteed Minimum Pension, in addition to the Non-Reserved Units, which will buy me a small annuity when I retire.

As a big portion of each policy is dedicated to this GMP, and each has a projected value, does that mean that I’m better off than if I just had one? ScotEq have said they think it’s unlikely that my contributions will be sufficient to provide the full GMP – but the (tiny bit of) good news is that they must, by law, make the deficit up apparently.

This is the bit I can't understand. Each portion of Reserved Units has a projected value at retirement. How does this relate to the GMP? If what I have is likely to be insufficient to provide a GMP, what relevance do the projections have?

Eternally grateful to anyone who can help – ScotEq take geological time to respond to any query, and it's usually incomprehensible anyway. And, having been conned once, I’m a little reluctant to let another IFA finish me off completely.

How much is the GMP anyway?

Thanks

dunstonh

Back in 1992, I was conned by an IFA into transferring 2 “frozen” final-salary schemes into Personal Pension Plans with one of the big providers – at great cost to myself. Yes, I've appealed to the Financial Ombudsman etc – but their attitude is that the IFA carried out a review which said he did nothing wrong, and hey – we all know IFA’s tell the truth, so I have no case to answer.

So, you were given advice to transfer out on the basis of best advice. You complained and the IFA said you were wrong and it was the correct advice. You then took it to the FOS who also agreed it was best advice.

It's clear from your post you dont have a clue about pensions so why do you think that you were conned?

I’m a little reluctant to let another IFA finish me off completely.

OK, good luck.

EdInvestor

hogweed wrote: »

ScotEq have said they think it’s unlikely that my contributions will be sufficient to provide the full GMP – but the (tiny bit of) good news is that they must, by law, make the deficit up apparently.

That's right, so don't mess with the policy.

This is the bit I can't understand. Each portion of Reserved Units has a projected value at retirement. How does this relate to the GMP? If what I have is likely to be insufficient to provide a GMP, what relevance do the projections have?

This only applies if you move the fund out of its current wrapper, which you won't do, because if you did ScotEq would no longer have to make up the GMP.

How much is the GMP anyway?

It should be on your original documentation. Some documents state the actual GMP which will be applicable at normal retirment date, with others the amount needs to be revalued according to set rules to give the retirement amount.Ask ScotEq for a GMP forecast.

hogweed

dunstonh wrote: »

So, you were given advice to transfer out on the basis of best advice. You complained and the IFA said you were wrong and it was the correct advice. You then took it to the FOS who also agreed it was best advice.

No trace of bias, of course, you apparently being an IFA yourself. The fact that you are prepared to assert that I received “best advice” without knowing anything whatever about the case suggests precisely the kind of self-satisfied smugness so prevalent amongst that breed.

The IFA reviewed his own behaviour, and concluded he had done nothing wrong. What a surprise. The Financial Ombudsman did not look into my case – he confined himself to enquiring whether the IFA had reviewed his actions or not, which is not in dispute – and concluded that, as he had reviewed them, and found nothing wrong, there was no need for him to investigate. This, according to the FO’s response to me, is standard behaviour for them – if IFA’s are prepared to state that they have followed the review procedure, they remain uninvestigated.

dunstonh wrote: »

It's clear from your post you dont have a clue about pensions so why do you think that you were conned?

Of course I haven’t a clue about pensions – that’s what makes me (and the majority) such an easy target for the unscrupulous. Here’s why I think I was conned. I had 2 “frozen” final salary pensions, worth a fair bit – the main one was with British Telecom.

In the years since the transfer to Scottish Equitable took place, I have spoken to various people in the financial industry, all of whom have expressed astonishment that any IFA could see transferring a BT scheme to a private pension plan as constituting “best advice”. Reading financial papers, websites, forums like this etc, I have never seen anyone suggest that this could have been in my best interests.


Of course, as you’re prepare to state that I received best advice, you’re entirely welcome to explain how such a transfer would be in my best interests.

hogweed

EdInvestor wrote: »

It should be on your original documentation. Some documents state the actual GMP which will be applicable at normal retirment date, with others the amount needs to be revalued according to set rules to give the retirement amount.Ask ScotEq for a GMP forecast.

Thanks for your help. I suppose what I’m asking in more general terms is – is the GMP a fixed amount, ie the same “Guaranteed Minimum” for everybody, or is it unique to me, and so dependent on my earnings, or on the performance of the ScotEq policy? I’m trying to understand the principle, rather than calculate the actual amounts at this stage.

dunstonh

No trace of bias, of course, you apparently being an IFA yourself. The fact that you are prepared to assert that I received “best advice” without knowing anything whatever about the case suggests precisely the kind of self-satisfied smugness so prevalent amongst that breed.

I have no bias. Your complaint was not against me and I have spoken out against bad advice given out in the past. However, you clearly dont know the subject yet say you were conned despite the FOS reviewing the case and saying you were not.

The IFA reviewed his own behaviour, and concluded he had done nothing wrong. What a surprise. The Financial Ombudsman did not look into my case – he confined himself to enquiring whether the IFA had reviewed his actions or not, which is not in dispute – and concluded that, as he had reviewed them, and found nothing wrong, there was no need for him to investigate. This, according to the FO’s response to me, is standard behaviour for them – if IFA’s are prepared to state that they have followed the review procedure, they remain uninvestigated.

That is complete rubbish. If you take a complaint to the FOS they investigate the advice given. They dont take the adviser's word for it.

Of course, as you’re prepare to state that I received best advice, you’re entirely welcome to explain how such a transfer would be in my best interests.

Impossible to say without facts. However, seeing as both the original IFA gave that advice and the FOS agreed the advice was good then it is likely that the advice was fine.

Here’s why I think I was conned. I had 2 “frozen” final salary pensions, worth a fair bit – the main one was with British Telecom.

Nothing there to suggest why you were conned.

purch

Back in 1992, I was conned by an IFA into transferring 2 “frozen” final-salary schemes into Personal Pension Plans with one of the big providers

Unfortunately back in 1992 'common wisdom' was that a Money Purchase type pension was a much better idea than a Final Salary scheme.

How times have changed.

At the time there were many firms trying to change their pension schemes from final salary to money purchase, the Bank I was working for being one of them. The Advisor gave all the staff a presentation, trying to tell us that we would benefit far more from the 'potential' :rotfl: growth of a MP Pension than being locked into a FS scheme that only increased by whatever indexed amount was mandated. (I remember telling the bloke he was an idiot........which didn't go down too well with the guvnors)

Like I said..............Times have changed.

hogweed

dunstonh wrote: »

That is complete rubbish. If you take a complaint to the FOS they investigate the advice given. They dont take the adviser's word for it.

Well, there you go again – saying it’s complete rubbish when you haven’t seen the letter sent to me by the FO. To make such a pronouncement when ignorant of the facts shows breathtaking bias in favour of your own profession. Small wonder so many people find IFA’s difficult to trust – you’re proving my case.

If anyone other than yourself is sufficiently interested, I’ll dig out the FO’s response to me and scan it in somewhere. Its wording was approximately “In cases where it is clear that the IFA correctly followed the Review Procedure, the FO will rule that further investigation is unnecessary.” If you're not aware of this, then perhaps you should acquaint yourself with the facts.

I didn’t come on here to argue the merits of this case, but it would seem that you're determined to do so.

dunstonh wrote: »

Impossible to say without facts. However, seeing as both the original IFA gave that advice and the FOS agreed the advice was good then it is likely that the advice was fine.

The FO didn’t agree the advice was good. They ruled that the IFA had followed the Review Procedure, so there was no need for them to investigate.

dunstonh wrote: »

Nothing there to suggest why you were conned.

Not in the bit you've just quoted, no. However, I then explained (above) why I felt I was. To reiterate – everyone I've spoken to in the financial industry (including an IFA whom I met socially) expressed astonishment that anyone thought transferring a BT Final Salary scheme (referred to elsewhere in this forum as “gold dust”) into a personal pension plan could be in my interest.

dunstonh

Small wonder so many people find IFA’s difficult to trust

IFAs have the lowest complaints to the FOS of any distribution channel and most of the complaints are not upheld. The vast majority have no issues with IFAs. Those that do tend to base it on advice given before regulation and/or required qualifications became necessary. Many of whom from that era have long gone. So, your opinions dont really match the facts.

You saw one that you believe gave you bad advice yet you want to measure all IFAs by that. I hope you dont eat some bad food and decide to stop eating because of that. I find the blame all for the actions of one comments stupid. You get bad teachers, doctors, policemen, solictors, accountants etc. Every profession has them. Yet you dont stop using them because of one individual and you shouldnt tar them all with the same brush.

You worked for BT. Well I spoke to someone at BT last week about moving a business line to a new office and was given a load of rubbish. That person was an incompetent fool. So, using your opinions, that would also make you an incompetent fool because you worked for BT as well.

Its wording was approximately “In cases where it is clear that the IFA correctly followed the Review Procedure, the FO will rule that further investigation is unnecessary.” If you're not aware of this, then perhaps you should acquaint yourself with the facts.

You had until 31st March 2000 to refer it to the FOS if you felt the review was not done correctly. The review set out the guidelines to determine if the advice was good or bad so if the outcome was that the review was followed correctly and no remedial action was required then that has to mean there was nothing wrong with the advice that was given at that time.

Recent comments by the person in charge of originally setting up the pension review have been that with hindsight, there were too many people compensated when they shouldnt have been and the review was more likely to favour the consumer.

everyone I've spoken to in the financial industry (including an IFA whom I met socially) expressed astonishment that anyone thought transferring a BT Final Salary scheme (referred to elsewhere in this forum as “gold dust”) into a personal pension plan could be in my interest.

My initial views would be the same. Decent final salary scheme, no reason to transfer. However, there are still occassions that it is best advice to transfer although I would personally decline and let someone else take on that liaiblity given that the Govt change the rules so often and that can retrospectively impact on the advice.

For reference you have not transferrred into a personal pension. Had it been a PPP it almost certainly would have been bad advice (ignoring everything else). You transferred into a section 32 buy out bond which is not a personal pension. Some of the guarantees built into section 32s mean that there is often no financial loss (at least not for you). It would really depend on the terms of the contract and when and how you take benefits.

hogweed

OK, I came here in the hope that someone might be kind enough to offer advice – thanks to the couple that did – not to waste my time arguing with you, so I won’t respond to any more of your outbursts. People will form their own opinions, I expect.

dunstonh wrote: »

...most of the complaints are not upheld.

As the FO have the ability to dismiss cases “without considering their merits” (the actual phrase they used), this is hardly surprising.

dunstonh wrote: »

The vast majority have no issues with IFAs.

You have no idea what the “vast majority” think, and neither have I. My opinions are based on my own experiences, what I read in the press, and what friends and colleagues tell me about their own feelings on the matter.

dunstonh wrote: »

You saw one that you believe gave you bad advice yet you want to measure all IFAs by that.

I don't want to measure them by anything. It is others – including other IFAs – who have told me the advice was bad, verging on the criminal. I was happily unaware that anything was wrong until I read an article in The Times about how so many people had been conned out of first-class final salary schemes into private schemes, and decided to investigate my own case.

dunstonh wrote: »

Well I spoke to someone at BT last week about moving a business line to a new office and was given a load of rubbish.

Hey, maybe an IFA had persuaded him to transfer his BT pension into an external one. Did you tell him you were an IFA before getting the load of rubbish?

dunstonh wrote: »

...if the outcome was that the review was followed correctly and no remedial action was required then that has to mean there was nothing wrong with the advice that was given at that time.

Yes. And all the other enquiries by the financial establishment into the conduct of the financial establishment, finding the financial establishment whiter than snow, are of course 100% accurate too. MP’s don’t fiddle their expenses, and pigs fly.

EdInvestor

hogweed wrote: »

Thanks for your help. I suppose what I’m asking in more general terms is – is the GMP a fixed amount, ie the same “Guaranteed Minimum” for everybody, or is it unique to me, and so dependent on my earnings, or on the performance of the ScotEq policy? I’m trying to understand the principle, rather than calculate the actual amounts at this stage.

It's unique to you.It relates to the amount in the pension that stands instead of your contribution to the state 2nd pension (SERPS).

Back in 1992, I was conned by an IFA into transferring 2 “frozen” final-salary schemes into Personal Pension Plans with one of the big providers – at great cost to myself. Yes, I've appealed to the Financial Ombudsman etc – but their attitude is that the IFA carried out a review which said he did nothing wrong...

It would appear that the '"review" you mention relates to the Pensions Misselling Review.This was an industry-wide review commissioned in the early 90s by the predecessor of the Financial Services Authority (FSA) - not the FOS (the Ombudsman). Thus it seems that the FOS wouldn't have any jurisdiction on it anyway and is saying to you that given the IFA has looked at the sale under the terms of the regulator's review and found nothing was wrong, then that's it.

I'd have thought it's worth asking the FSA for help on this one - at least that they should check that the IFA properly followed the terms of their Review when looking at your case. While the BT scheme is not quite as copper bottomed as the NHS or the teacher's scheme, it is certainly the case that very few IFAs if any would sign off on a transfer these days.Seems to me it's reasonable to ask for a further check from the FSA. You should also ask to see a copy of the IFA's investigation and findings.