Mis-Sold Pensions: Making a Claim

Pensions have always been a tricky area. We know we’re entitled to a state pension, but once you get into the idea of occupational and personal pensions, most of us become lost very quickly – and that’s not good, since we’re talking about our money and our future.

For several years – between 1988 and 1994, to be precise – a number of people whose pensions were occupational and salary related were told that taking out personal pensions was a good idea. The same applied to some who still had pensions with a former employer.

The problem is that a number of those who were given that advice might well have ended up financial losers, according to data from the Financial Services Authority (FSA). They decreed that firms who sold pensions during that time had to review every one, and where customers had sustained a loss, they had to be compensated.

The Review

Those who thought they’d been mis-sold pensions had until 2000 to send in a form to the pension company in order to have their cases checked, although the initial reviews began in 1994.

Although probably all pensions should have been reviewed, it was in fact limited to those who’d requested a review. Inevitably, some people will have missed the 2000 deadline. Even now it’s not too late. If you wish to have to pension reviewed to discover whether it was mis-sold, you can contact the company that sold it to you and request what’s termed a 'special pensions review procedure.'

The review works by comparing what a person might have accrued in an occupational pension as compared to the personal pension they’d been advised to take out. If the former was higher, then the company that sold the pension has been required to make up the difference.

There are various ways to remedy that loss. It could be done by putting the customer back in the occupational scheme, where possible. If that couldn’t be done, then the customer would receive the difference in a single payment. In some cases a review will be carried out when the customer hits retirement age and any financial losses made good then.

In the event that your pension company has gone out of business, those cases are being handled directly by the FSA, so you’ll need to apply to them, although their awards have a ceiling of £48,000.

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State Second Pension

Things are somewhat different with the State Second Pension (S2P) or Serps, as its predecessor was known.

In the late 1980s and into the 1990s, the government encouraged people to opt out of S2P and take out personal pensions – called an appropriate personal pension or APP. The government paid part of the person’s NI contributions into the APP, which gradually amassed into a lump sum waiting for the person’s retirement.

Although the Financial Services Authority has admitted that contracting out of S2P was a mistake that could leave people £4 a week worse off after retirement, they found no evidence that these pensions were mis-sold, although they do have guidelines to follow for anyone who does feel they may have been sold an APP. Making a successful claim is unlikely, however.

The Next Step

Now that you have read through the advice above, you might want to put it into practice. Our Unclaimed Money Tracer lets you tell us what might be out there and we will map out the exact UK services to search, in the right order, to track down unclaimed money. Try it now →