Pension is a fund in which a sum of money is put during the employment years of an individual. The aim of saving money through a pension is to ensure that a person is well supported financially once they retire from work. Once the individual has retired, they get some payment from the pension fund. These payments are known as annuity claims. In other words, a pension is a benefit plan.
What is an Annuity?
An annuity is a financial product whose primary role is to issue payments in fixed sum to an individual as a form of income stream for retirees. They are only paid to individuals with a pension plan.
Types of Pensions
There are three main types of pensions. They include:
• Employment-based pensions- This type of annuity is designed for individuals who are employed and earn a steady income. It requires both employer and employee to contribute during the entire employment period, until retirement. Funds saved under this type of annuity are exempted from taxation. In the UK, an SSAS is a type of pension in this category.
• The state-designed social and state pensions- In the UK, this is also referred to as a national pension. Both employed and unemployed citizens are required to save in this fund, and the amount of pension is based on the citizen’s contribution.
• Disability pension- These pensions are specifically designed to provide for members in case they get disability that they were not born with. In most cases, this type of pension may take the form of an early retirement plan.
What is a Mis-Sold Pension?
A mis-sold pension is a situation where one gets conflicting advice, causing them to end up with a pension that is not ideal for them. In most cases, the blame lands on the pension adviser.
Most individuals figure out that they have been forced to take a mis-sold pension only when they do not see the expected results or returns. This is why individuals should know how to track pensions. If you are not tracking what is happening in terms of the growth, you will never be able to reach to the root cause of the problem.
Instances Where Pensions Are Mis-Sold
Below are some instances where pensions may be mis-sold:
• If the pension adviser fails to consider the health and medical conditions of the pension buyer
• If the buyer was not given adequate information required to make such a decision
• If the buyer does not get the chance to shop around and consider a variety of options before deciding on the most suitable pension option
• Some people may end up buying the wrong pension because of misleading information provided by the pension adviser.
Some of the most commonly mis-sold pensions include:
• Self-Invested Personal Pensions
• Small self-administered schemes
• Free Standing additional voluntary contributions
• Final Salary Pension Transfer
The final salary pension transfer is the most commonly mis-sold annuity. It works in such a way that the employer takes into account the final salary of the employee at retirement and provides it to the pension provider.
What to do about Mis-Sold Pensions
The best option for dealing with the issue of a mis-sold annuity is claiming compensation. It is, however, essential to note that there is a limit before which you can make such claims. After this limit lapses, the issue gets out of hand, and you may not get any compensation. Therefore, you have to act fast.
The first step to making a claim is to contact a professional in the sector. The expert will help you reach the relevant parties and find out the details on how you found yourself in such a predicament. You will then have to file a claim form, which you can cancel within the first two weeks. The form is presented to the pension provider, who will be asked to provide your file within forty days. The pension provider has eight weeks to respond to the annuity claims.
Bottom Line
Cases of mis-sold pensions are not uncommon. If this happens to you, it will be essential for you to claim compensation within the prescribed time. Once your claim has been approved, you will get your compensation. However, if your request is denied, the case can be forwarded to the Financial Ombudsman.
