The Financial Conduct Authority (FCA) has once again warned about the potential cost of transferring out of Defined Benefit Pensions following poor financial advice, this time putting a figure of £20bn on the problem.
The introduction of Pension Freedoms and the resulting array of retirement income options “can cause significant consumer harm”, and the report goes on to warn that “unsuitable transfers out of DB schemes could, collectively, result in losses of up to £20 billion worth of guarantees over 5 years”.
Defined benefit (final salary) pension schemes are a very solid and dependable source of income for retirement and there must be an extremely good reason for someone to want to transfer this into a riskier type of investment. Getting the right sort of advice on this is therefore crucial.
Common industries that DB transfers affect include:
- Coal miners
- British Steel workers
- Railway workers
- British Telecom staff
- Local Government
- Civil Service
- Armed forces
- Emergency services
For some time now, the FCA has been saying their default position is that it is not often in someone’s best interests to leave a pension scheme that will provide them with a guaranteed and sustainable income when they retire. In other words, it is unlikely that another scheme would be able to perform so well as to provide a level of income equal to or better than a scheme with a defined level of income on retirement.
Commenting on the FCA’s recent publication, Peter McKenna, Partner, said:
“Unfortunately we have seen lots of clients with Defined Benefit pensions being given completely unsuitable advice by FCA regulated advisors and literally losing out on hundreds of thousands of pounds in pension savings. These sorts of losses are not exceptional either, they are relatively common, sadly. We also fear that there are many thousands of people out there who have been advised to leave their Defined Benefit scheme and have no idea there is an issue. Even in their retirement they may not realise the problem with the advice they were given. I would urge anyone who has been advised to move out of a DB pension to seek advice as to whether this was in their best interests.”
TLW Solicitors specialise in financial mis-selling compensation claims. We have helped many individuals who received unsuitable financial advice to transfer out of their Defined Benefit Pensions to a riskier investment or less advantageous scheme. The resulting loss to pension value and uncertainty surrounding their financial future can cause investors considerable stress and worry. However, many people do not even know there is an issue.
TLW Solicitors has an experienced financial mis-selling team who may be able to help you to recover your losses even if your financial adviser or the firms you invested in are no longer trading.
Please watch our video here, where Peter explains DB transfer cases in detail.
If you think that you, a friend or a loved one may have lost out financially after receiving poor advice to transfer a defined benefits pension, then please get in touch with one of the specialist financial mis-selling lawyers here at TLW Solicitors for a free, no-obligation discussion.
You can either ring us on 0800 169 5925, email or complete our call-back form.
Meet Peter, Peter is a TLW Partner and Director of the Financial Mis-Selling team.
Peter is on hand to give you the best advice.
The retirement income market is a key area of our focus, particularly the suitability of both products and advice as the industry adapts to pension freedoms.