SINCE the introduction of pension freedoms in 2015, early pension release schemes have been a target for scams and other pitfalls.
Figures from the Financial Conduct Authority, the financial regulator, show that advice in more than half of the defined benefit transfers, where the recommendation was to move the retirement pot to access cash, was unsuitable or unclear.
The government’s ‘Pension Wise’ website has a specific section warning about schemes to try to get people to access their pension before the age of 55 highlighting that many of these schemes are basically scams.
Indeed, if you were to search ‘pension release’ or ‘pension unlocking’ online, a raft of websites will encourage you to switch, with some even telling you that you can sell your pension, which is usually incorrect advice.
We act for clients who have been encouraged to move their pensions from safe, traditional and occupational pensions to speculative investments; carrying risks which were not explained to, or appreciated by, our clients.
Many people will be unaware that the monies transferred from their pension to a certain scheme are at risk and may be lost and, worryingly, will not know, or be advised, that pension funds can be subject to heavy tax burdens if accessed prematurely.
A financial adviser has a duty to act in the best interests of their client, but unfortunately this is not always the case. Many investors have alleged that they were pressured into a decision to invest their pension monies into an unsuitable investment by a financial advisor. In many instances, the financial advisor will be able to claim substantial commission when you agree to transfer your pension.
If any of the following statements apply to you, then we suggest that you contact a specialist solicitor straight away:
:: Your financial adviser did not carry out a ‘fact find’ exercise to establish your financial circumstances and objectives;
:: Your personal and financial circumstances or attitude to risk were not properly considered;
:: You were pressured into investing your pension into a new ‘higher return’ scheme, even though it was something you did not want or need;
:: You were not advised of the tax ramifications in releasing your pension;
:: You were sold a high-risk investment without having properly been advised of the risks;
:: There were surprise fees or additional costs attached to the investment that you were not made aware of from the start;
:: Your investment has now significantly reduced in value or is worthless.
A pension is one of the most important investments a person can make in their lifetime, therefore of the utmost importance that you only take advice from a person who is authorised by the FCA to provide advice in relation to pensions.
If you believe you have been mis-sold a pension and lost money due to unsuitable advice, you need to act fast. There are strict time limits for bringing an action against those who have provided you with negligent advice. We would urge anyone who has agreed to transfer their pension into a high-risk investment to contact a specialist solicitor immediately.
:: Andrew Morrow is a partner at MTB Solicitors (www.mtb-law.co.uk).
