Aviva’s Defined Benefit Final Salary Pension Scheme
It has come to light that since 2015, a considerable number of current and past employees of Aviva have been persuaded to transfer their defined benefit (DB) pensions to other less stable and secure schemes, as was the case in their regional centre based in Pitheavlis, Perth.
Many of those who have transferred their DB pension will have enjoyed a 25% tax-free lump sum, so it may be hard to imagine they could have been the victim of faulty pension advice. Unfortunately, however, those who have been tempted away from Aviva’s Defined Benefit Final Salary Pension Scheme may have put their pension funds at significant risk.
Unsuitable pension transfers sold by fear of missing out
Defined benefit pension schemes like Aviva’s are incredibly valuable and transferring away to an alternative arrangement like a Self Invested Personal Pension (SIPP) is only beneficial to a small minority of people. That’s why the Financial Conduct Authority (FCA) have repeatedly voiced their concern over the large volume of people taking this course of action.
Following a review of DB transfers made from April 2015 to September 2018, the FCA found fault with not just the quality of advice given regarding DB pension transfers, but fundamentally with the sheer number of transfers taking place.
Often all it takes is a small initial number of DB pension holders being advised to move (often by one local advisor or advisor firm) and suddenly the ripple effect of colleagues gripped by the fear of missing out on a good deal turns the trickle into a tide.
These individuals are all offered the same solution–such as Royal London or Prudential–and charged transfer advice based on a percentage of their fund value as opposed to a flat fee. This means some DB holders end up paying substantial four or five-figure sums to move–ironic considering the FCA are currently consulting on capping transfer fees at £3,500.
This bad practice has put a huge number of peoples’ hard-earned money at risk. Stock market fluctuations can all too easily decimate pension funds transferred out of the safety of a DB scheme, with the genuine risk of some pension pots running dry long before the pension holder has passed away.
Were you given faulty advice?
The team at Beat the Banks can reconstruct any DB transfer advice taken since April 2015 free of charge to analyse if faulty advice has been given. If this is found to be the case, we can then guide you through the process of claiming compensation and recovering your financial security.
If you were persuaded to transfer out of Aviva’s Defined Benefit Final Salary Pension Scheme, call us on 01382 200474 to find out how we can help you.