Pension Transfers

As many as 55% of workers are transfering out of Final Salary Schemes into riskier stock based pensions

In almost all cases, pension transfers are not beneficial and only offer a temporary bonus at the cost of long term benefits.

According to accountancy firm KPMG one in four workers that were offered a transfer deal accepted it

Some firms have been promoting high transfer rates in order to win multi-million pound pension schemes

As a result of this, many pension transfers have been mis-sold to people who did not need one


Need to know

  • Final Salary Schemes (FSS) are pension schemes provided by companies and employers to their workers
  • They are very stable and offer benefits such as a guaranteed pension, raises in line with inflation and a pay out to a surviving spouse.
  • A Pension Transfer requires you to give up your benefits in a FSS (or similar company scheme) for the promise of an enticing cash value either as a one off payment or to add on top of your pension
  • A pension transfer moves you from a company pension to a personal pension
  • Most pension transfers are much riskier than occupational schemes as they rely on investments and do not guarantee the same benefits
  • This form of mis-selling dates back to the 1980s

Reasons to claim

  • If you were actively encouraged to transfer to a personal pension despite it not being in your best interests
  • You weren’t given information about how your new plan would perform and work in comparison to your old plan
  • If you changed jobs and your new employer encouraged you to transfer to a personal pension or suggested you should as they did not provide a pension scheme
  • If you were incorrectly advised to leave your company pension for a personal pension

How to claim

  • As with any complaint, always go directly to your provider first. Explain that you feel you have been mis-sold your pension transfer and provide evidence.
  • If your provider doesn’t respond within 8 weeks or you are unhappy with their response, you can take your complaint to the Financial Ombudsman
  • If you took out a Pension Transfer between 29th April 1988 and 30th June 1994 then you are unlikely to be eligible to bring your claim forward as you were likely a part of the Pensions Review.
  • If you were not included in the Pensions Review then you can take your complaint to the Financial Ombudsman Service who will review your case and come to a decision.

The inside track

  • If you are happy with your transfer but are unhappy with the way your new scheme is being run, you can take your complaint to the Pensions Ombudsman. They will help if you’ve already tried to resolve your problem and will look at the facts and come to a binding decision.
  • If you are trying to decide which private pension to transfer  to then read our guides on retirement planning, Sipps and personal pensions to give you a fully informed view.
  • If you are absolutely certain you still want to take a pension transfer then adding the monetary incentive to your pension fund will be much more beneficial in the long term

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