Over the last few years, the number of individuals claiming compensation for mis-sold pensions has increased tremendously. The amount of money involved in these scams is vast and the number of people affected is shocking. This is the reason you should be aware of every pension scheme to avoid being on the losing end.
This article discusses the different types of mis-sold pensions and how to know if you have been mis-sold a pension. Read on to find out!
1. Self Invested Personal Pensions (SIPP)
This pension scheme is mostly set up to hold under-performing, high-risk, unreliable investments with ridiculous charge structures. For this plan, the individual doesn’t have to involve their employer. They need to reach an agreement with their pension provider and start paying for the pension scheme.
SIPP themselves are not a problem, and as a matter of fact, they can be an excellent option for the user. The only problem is the subsequent purchase of underperforming and high-risk investments, which can have higher annual charges. Consequently, they can be impossible to sell on. Many SIPP operators have been criticized for their lack of sufficient research and failing to do the required background checks. This has resulted in many complaints against both the SIPP operators and financial advisors. If you have mis-sold a pension, you are eligible to make a pension claim.
2. Final Salary Transfers
This is where an employer evaluates your salary and offers a figure to move across to the new pension product based on the last payment. In various cases, this type of transfer is not a good idea. If you transfer the final salary pension, you lose any assured benefits. Besides, you risk losing the funds in your pension pot. If you have been wrongly advised to do the transfer, you can file for compensation.
3. Small Self-Administered Scheme
This type of scheme is established to prevent rough guidelines by unregulated entities. These can be substitute sales agents or service providers. Like SIPP, Self Invested Personal Pension is set to uphold illiquid, high-risk, and underperforming investments.
Transfers to this pension scheme are made to avoid stringent safeguarding regulations. If you can prove that the financial advisor inappropriately advised you to move to an SSAS, you can make a mis-sold pension claim.
4. Occupational Pension Scheme
This type of pension scheme refers to an employer’s account to help an individual save for their retirement. In many cases, the scheme falls into three categories— defined contribution schemes, defined benefit schemes, and cash balance plans. All of these schemes are well regulated. In some cases, however, this is not always the case. If your scheme was set up by an unregulated third party, you could be entitled to a claim.
5. How to Know you have been Mis-sold a Pension
A professional and diligent financial advisor should follow a strict code of conduct. When offering you advice on the different pension schemes, they should cover specific areas to ensure you make a wise decision. In the UK, many people have lost their pension funds due to incorrect advice. It is essential to work with a financial advisor who puts your interests first. They should advise you on the correct decision to make even if it is not beneficial to them.
They are obligated to provide all the necessary information, allowing you to make a well-reasoned decision. They should assess your attitude to risk and inquire about your circumstances, including medical and health conditions. They should use this information to recommend the most suitable product. Similarly, they should present an opportunity to compare the product with others on the market. If your financial advisor did not do any of these things, then you have been mis-sold a pension. In such a case, you are entitled to a claim.
6. How Long Does a Mis-Sold Pension Claim Take?
The period is taken for a mis-sold claim to be approved on the complexity of the case. It also depends on the pension provider and financial advisor involved. If they wish to fight the case and are still trading, it could significantly prolong the process. It can increase to months or even years to the length of your pension claim. Contrary to this, if the parties accept responsibility and respond quickly, it can be as short as two months.
Every compensation case is unique and it can be challenging to predict a specific time structure. It is important to work with a company that always strives to set your expectations legally while chasing the claim through completion. In the UK, most mis-sold pension claims take around 13-26 weeks to settle. That is, if it is through the Financial Services Compensation Scheme. It, however, takes 6-12 months when using the Financial Ombudsman.