Since the late 1980’s, the transfer of pension funds from one plan/scheme to another has been commonplace. Often there are good reasons for such action but sometimes the transfer was not necessarily the best course of action for the policyholder and they may end up with a pension income far lower than they would have received had they not transferred. The main areas we check are as follows: a) Final Salary Transfer – rarely is it good practice to recommend that a member transfer away from a final salary/defined benefit pension scheme (which has built in guarantees) into any form of alternative pension product. b) Guaranteed Annuity Rates (GARs) – GARS are often very attractive and so it is seldom beneficial to forego such a benefit in favour of a different pension product or provider. c) Risk – did the advice given reflect the individual’s attitude towards risk and their tolerance of losses – again, especially important where the pension arrangement was expected to be the individual’s main source of retirement income. d) Comparison – did the adviser give the member a comparison between the costs/benefits of the original arrangement and the new fund/provider? e) Lack of transparency on fees – we often find that the individual was not made aware of any management fees or additional costs attached to the investment. Often it is clear that the transfer was made for the benefit of the adviser (commission received) and not the member. f) Investment selection – although there is no guarantee that a new pension arrangement will perform any better than the original arrangement, it is not usually a problem where a transfer between mainstream investment products/funds is concerned. The main areas of claim tend to involve transfers to arrangements where a higher risk investment strategy is implemented (perhaps using illiquid or ‘alternative investment’ funds). g) Understanding – were the advantages and disadvantages of the investment strategy explained in equal measure or were the perceived advantages highlighted whilst the downside was underplayed? Again, maybe there was a deliberate attempt to misinform the investor. If you think your Pension Transfer was unsuitable for you and you were mis-sold, please complete the contact form below.Back to Services
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