Many defined benefit pension holders have been advised to transfer their defined benefit pensions. This may, however, not be the right decision for you if you are considering or have completed a defined benefit pension transfer please read this article.
Recent research has shown that 75% of people who transferred their defined benefits were unhappy with their new provider and only 15% would recommend transferring your defined benefit pension plan if asked for advice on whether they should do so or not.
If you’ve been advised to make this move, it could be time to reconsider the decision as some of the benefits can be lost in a defined benefit pension transfer and as such compensation claims may arise. In this blog post we will discuss more about what these compensation claims might look like and how much money it is possible to claim back.
Possible Compensation Outcome Amounts Are Large
If you’ve been advised or are thinking about making this move, it could be time to reconsider the decision as some of the benefits can be lost in a defined benefit pension transfer and as such compensation claims may result. The claim amount could be sizeable and in some cases in access of £350k of compensation.
Find out if you can claim
It is important to find out if you can claim. You can check yourself, or you can use a professional service to do this. They will charge a fee of up to 25% of the compensation (It is worth seeing if you can negotiate this figure) . However, they will often operate a no-win, no-fee claim and therefore this can mean you could get redress for lost benefits and money you have lost.
The claim process
The claim process is relatively straightforward. You need to prove that the pension transfer was undertaken wrongly (that you were not advised of all your options) and as such, there could be a compensation payment due for lost benefits or money that has been lost in value through poor investment decisions made by the defined benefit provider who took over responsibility for your defined benefit pension plan.
You may think you had good advice
Claims can happen when people have their defined benefit pensions transferred without getting advice about what they are entitled to beforehand, meaning they do not know if there will be any financial detriment associated with making this change.
When somebody decides on defined benefit transfers it is important to get confirmation from an advisor and work out if you would like them to act on your behalf should things go wrong.
A defined benefit pension is a form of defined contribution scheme whereby the company pays benefits based on salary and service with an employer, these are funded by investments made at point of retirement or leaving employment.
The FCA Warning
(Direct from the FCA Web Site) If you transfer from a DB scheme to a DC scheme, you:
- lose the guaranteed lifetime income from your DB scheme, for you and your dependants
- lose the inflationary protections offered by your DB scheme
- have to pay a DC scheme, and investment managers, to manage your pension and the investments in it, which is deducted from your pension pot
- have to decide how to invest your money, or pay someone to do it for you
- may see your pension pot fall in value, as well as rise
- may have less income in retirement, particularly if the value of your pension pot falls
- may run out of money in your lifetime
75% of people who transferred were not happy with the results
The latest figures from Defined Benefit Transfers Ltd show that over 75% people who have transferred their pensions are unhappy with their new provider and only 15% would recommend transferring your defined benefit pension plan if asked for advice on whether they should do so or not.
People who have been advised to transfer their defined benefit pension may lose some important benefits, such as inflation-linked increases in income payments. This means you could be entitled to a sizeable compensation claim through poor investment decisions made by the defined benefit provider who took over responsibility.
You can find out for free if you could claim by trying a firm like claimadvice.uk. They will guide you through the process and help you to understand if you can claim or not.