Bad advice on Money Purchase scheme?

Elwick

Hi all,

Wanted to say hi, I'm a newbie and my first post is about pensions. I'm not savvy at all with financial things and I have become increasingly worried that I received some extremely bad advice.

I'm 38 and I have been with the same company for around 16 years now. When I joined the company in 1992 we had a final salary scheme - we then had a major merger with another company in about 1996 and at that time we were offered either to stay in final salary or to opt for a money purchase scheme. The company paid for independent financial advisers to talk with us individually about our circumstances to help make the decision.

I was advised to opt for money purchase....I know, looking back it seems like a bad decision.......but if you think that was bad - read on......

In 2001 we were offered a one-off and final chance to switch back into the final salary scheme. I spoke with the same IFA company again (a different person). I was uncertain whether to switch back - and I wanted some independent advice. Once again they advised me to stay in the money purchase scheme. The main reasons they gave were around portability of the money purchase pension if I was to leave the company. This advice was given through a helpline over the phone so probably no record of this discussion.

The more I read and understand about pensions, the more I feel I would be much better off in final salary (unless someone can convince me otherwise). I really feel I got very bad advice on this decision. I'm not alone either as a lot of my colleagues were advised the same way.

My question is this - is there any way that I/we can seek to get some redress on this? Either from my company or from the IFA?

Elwick

dunstonh

The more I read and understand about pensions, the more I feel I would be much better off in final salary (unless someone can convince me otherwise).

Its not as clear cut as that. It depends on the company contribution, your personal contribution, selected retirement age vs scheme retirement age, death benefits etc. There may have also been concerns over the strength of the scheme.

Typically, you would err on the side of the final salary scheme unless the employers contribution to the money purchase scheme is good.

This advice was given through a helpline over the phone so probably no record of this discussion.

That wouldnt really make it advice then. No factfind, no research, no suitability report saying what you should do. Its little different to getting advice from here.

My question is this - is there any way that I/we can seek to get some redress on this? Either from my company or from the IFA?

Unless you have evidence to confirm the "advice" you were given and assuming the advice is actually bad then there probably isnt much you can do.

You could go back to that IFA and ask them to check the advice you were given regarding the occ scheme. If they have a record then you could ask for a copy of it.

Were the IFAs acting as IFAs or administrators for the occupational scheme? I know that sounds strange but some large firms have an IFA arm and an administrator arm for occ schemes and you may have just been speaking to an administrator rather than an actual IFA.

purch

It really was the 'apparantly' sensible thing to do, throughout the 1990's.

It wasn't until the Stock markets reversed in the early part of this century, that those peddling the idea that Money Purchase was better than Final Salary came to the belated realisation that what goes up can also come down.