Defined Benefit Scheme Transfers
Regulation in terms of Defined Benefit (DB) pension schemes has been in place since July 1988. One consistent voice from every regulator since that point has been that moving away from this type of scheme should always initially be viewed as NOT being a good idea.
Given this, it is somewhat hard to believe that around two million DB holders were advised to move their pension elsewhere between 1988 – 1994 and that over £100 billion of DB pension funds have been transferred since George Osborne’s “pension freedom” in April 2015.
The scandal of poor DB advice in the late 80s and early 90s led to the formal Pension Review which finally ended in March 2000 with a cost to industry of a reported £11 billion.
The FCA distilled figures
The FCA distilled figures collected and analysed over a three-and half-year period from April 2015 have also caused deep concern, with 75% of the advice given to move away from the safety and guarantees of a DB scheme being classed as faulty. Incredibly, 69% of DB holders who approached Pension Specialists for guidance during that same timeframe were advised to move. Not surprisingly, the FCA are now consulting in terms of banning contingent charging and capping transfer advice fees at a maximum of £3500 – a considerable blow to some advisors who have charged fees as high as 10 to 20 times this figure. It is sadly true that a number of Pension Specialists have raked in huge amounts of fees for initial and ongoing fees, with often handsome commissions paid to multiple introducers, whether they are regulated or otherwise.
Poor, faulty or, in some cases, fraudulent advice means a substantial number of former DB pension holders may now be looking at a grim and uncertain retirement after having lost some, if not all, of their hard-earned cash. Some pension holders are also yet to understand how, what seemed like a lottery win in unlocking often substantial six or even seven figure pension pots can be a ticking time bomb.
So how do you know if you have lost out? For those given the shocking advice to transfer DB pensions into SIPPs (link) and then into Unregulated Collective Investment Schemes (UCIS)(link), unfortunately they are often almost immediately aware that their fund has suffered losses or is under significant and impending risk. But for others, it can be much less obvious. It only initially takes a small number of current or former co-workers transferring away before fear of missing out (FOMO) spreads like wildfire. Within some cases, all the advice was given by just one advice firm or individual.
If that sounds all too familiar, how would you know if you have been a victim of faulty pension advice or how much it has left you out of pocket now and in the future? That is where Beat the Banks are here to help. We know how distressing a situation like this can be and we will do everything in our power to find a resolution for you, including reconstructing your pension transfer to help establish if the advice you were given was both suitable and appropriate.
Call us on 0800 193 1234 for a free no-obligation chat with one of our expert advisers to find out what we can do for you.