These days, there are many financial options for your retirement. It’s easy to swap your DB (defined benefit) pension for a SIPP or other pension product, but the key question is – is it the right thing to do?
Independent financial advisors are there to guide your decision. However, in the past, some investors have received poor advice from their IFA (independent financial advisor), which has led to them losing money further along the line.
The FCA has issued a warning to IFAs regarding Rolls Royce pension transfers. Here’s more information about the situation.
Redundancies and pension transfer requests
The FCA has recently requested data from IFAs, regarding the advice they offered to clients transferring their DB Rolls Royce scheme to an alternative pension product.
Back in May, Rolls Royce announced they were cutting 9,000 jobs. In the wake of this, 3,000 workers applied for voluntary redundancy. Some IFAs saw an opportunity and advised these ex-Rolls Royce employees to transfer their Rolls Royce DB pension – which the company itself flagged up as an issue.
After being notified, the FCA reiterated that swapping a DB scheme was “unlikely to be in the best interests of most consumers”.
Rolls Royce’s stance
A spokesperson for the company emphasised that they fully supported the FCA’s actions. They also added: “Our defined benefit pension scheme is – and remains – well funded. The unprecedented impact of the Covid-19 pandemic on the whole aerospace industry, however, has forced us to restructure our business and this is resulting in a significant number of job losses in the UK.
We proactively alerted the FCA that this restructuring was attracting attention from various financial advisors targeting our colleagues.”
Avoiding another British Steel situation
The FCA’s focus is on avoiding another pension mis-selling scandal like the British Steel pension situation. 8,000 members swapped their DB scheme for a new pension – a move that was collectively worth around £2.8billion.
Regrettably, many of these investors lost money as a result of this, and the FCA had to intervene. In the end, 10 firms were ordered to cease providing transfer advice.
Cracking down on poor pension advice
An FCA survey revealed recently that too much financial advice was “still not of an acceptable standard”. Claims are still being made for pension mis-selling, and although the law has been changed, there are still unscrupulous IFAs in operation.
Here are some of the most common signs that you’ve been mis-sold your pension:
- You were told you should transfer to a SIPP, even though your existing pension was more appropriate for your needs.
- The financial risks weren’t explained to you.
- Your advisor didn’t assess your attitude to risk.
- Your advisor didn’t ask about your personal circumstances or plans for the future.
- You weren’t given enough information about your new pension product.
- You were pressurised into transferring your pension.
Taking action against mis-sold pensions
If you believe you received bad or misleading pension transfer advice, you may be able to seek compensation. To find out if you’re eligible to make a claim, get in contact with Goodwin Barrett today by calling 0808 163 1659 today or email firstname.lastname@example.org.