Who Can Be a Pension Transfer Victim?
Most people aren’t experts in investments and financial management. Yet, almost everyone will have some pension savings. That means that most people can benefit from speaking to a pensions advisor. Sadly, pensions advisors aren’t infallible either.
Bad advice can cause harm to your pension savings, leaving you with far less money than you might otherwise have. Almost anyone can become a pension transfer victim.
Research commissioned by the Project Bloom group of agents found that some people had lost up to £1m in various pension scams with an average loss per victim in 2017 of £91,000 per person.
These huge sums show the dangers of falling victim, which could wipe out the funds you’ve worked hard to build up during your working life.
How to Identify if You’re a Pension Transfer Victim
You might be a pension transfer victim if you were mis-sold a SIPP. A SIPP, or Self Invested Personal Pension, is best suited to experienced investors. SIPP products must be carefully managed to take advantage of the large potential gains, which means that these pensions are only really suitable for people that know just what they’re doing.
SIPPs come with big risks, so you may have been mis-sold your pension if the risks of these products weren’t emphasised.
You might also have been a pension transfer victim if you’ve used a Defined Benefit Pension Transfer or DB. You might also know this as a Final Salary Transfer. You may have been advised to transfer away from a pension that guaranteed a specific annual payment, and if that’s the case, then it’s very likely that you’ve lost both money and financial security.
Defined Benefit pensions are extremely hard to get hold of, and you may have given up a much sought-after financial product.
You’ve possibly been a pension transfer victim if an advisor has been vague with their advice. They may not have made sure that you fully understood the risks and benefits of moving your pension. Some advisors might push certain products, rather than explaining the full choice of available pensions.
Other Ways to Be a Pension Transfer Victim
Pension transfer scams are a very big problem, and surprisingly easy to fall for. You shouldn’t be embarrassed if you’ve been swept up in the promise of a great financial outcome.
Every year, many people are pushed into transferring their pensions to scammers. They’ve promised a great new fund that brings lots of benefits, then they move their money and could end up losing every single bit of it.
You might have been a victim of a pension transfer scam if you’ve been encouraged to invest in property or other high-risk products like storage or renewable energy. Moving your money should only be something you do when you’re sure that it’s safe. Sadly, pension scammers can sound very convincing as they make you give away your hard-earned savings.
If someone’s guaranteeing better returns, suggesting loopholes or using high-pressure sales talk, there’s a good chance that you’re about to be a pension transfer victim. You can make sure that you’re doing the right thing by separately contacting an FCA-approved financial advisor. Anyone that’s responsible, and acts within the law, will be happy to wait whilst you consider your options and speak to someone else for advice.
When Are You Not a Pension Transfer Victim?
Pension values can rise and fall, and your move won’t always be the best. This doesn’t necessarily mean that you were mis-sold your pension transfer.
If your advisor gave clear information about the range of products you could choose from, considered your individual circumstances and talked you through the risks of each product, then you haven’t been mis-sold a pension transfer.
If you were told about all fees and charges, as well as given access to the full product terms and conditions, then it’s likely that you were sold a pension transfer properly.
Protecting Yourself From Becoming a Pension Transfer Victim
Never make a pension transfer decision straight away. Ask for documents that you can take away, and time to consider your options. Then, speak to other people, including independent financial advisors.
Nobody should rush you into any decision about what to do with your pension. A few days, weeks or months won’t make a big difference.
If something sounds too good to be true, it’s very likely that it is. Theft of money from pensions is a very real problem for many. Often, though, it’s not outright theft that you should watch out for. Often, pension transfer victims aren’t targeted by scams but advised by those with limited experience.
What to Do if You’re a Pension Transfer Victim
You have the option to make a claim if you believe you’ve been a pension transfer victim. You can make an independent claim or get help from a financial advisor.
If you choose to go it alone, you can make a claim through the Financial Services Compensation Scheme (FSCS). With specialist help, you might have more chance of your claim being successful.
When to Make a Claim
If you’ve been mis-sold a pension transfer, you do need to act fairly quickly. You’ll have to make your claim within six years of the pension transfer. If you notice something’s wrong soon after the transfer, the clock starts ticking straight away. From the moment you realise your pension transfer was mis-sold, you’ve got three years to take proper action.
What to Do Now
If you believe that you’ve been scammed or mis-sold a pension transfer, contact the Financial Conduct Authority. The FCA can accept your report and launch an investigation.