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Do you know what pension misselling is? If you lived through the 1980s, and you were aware enough to keep track of the news from the financial world, then you probably have some familiarity with this term. At the very least, you would have heard of it. Of course, this was a long time ago and given that the average worker today was a mere child or not yet even born during the 80s, then there is a good chance that this is your first time in dealing with this term. In any case, if you want to know more about pension misselling and how you might be affected, then read on.
What Is Pension Misselling?
Thousands of people were affected by pensions mis-selling back in the 80s and early 90s. The practice was eventually curbed as people gained more and more awareness about this financial scam. Of course, those who do not know history are doomed to repeat it. While the world is much better informed right now, the reality is that the stigma of the pension misselling scandal of the 1980s has been all but forgotten – but let’s not get ahead of ourselves yet.
First of all, it is important to gain an understanding of what exactly is Pension Misselling. To give you a bird’s-eye view of the topic, people were a bit more gullible back in the 80s because information dissemination was not as sophisticated as it is today. Financial scammers took advantage of this and sold thousands of personal pension mortgages as alternatives to their company mortgage plans that came with fewer risks. In contrast, personal pensions were dependent on a variety of market factors and there were tons of risks involved that agents never informed their clients of. If performance was poor, then the projected gains in these pension plans would never fully come into fruition.
These pension products were considered to be quite attractive at that time because they offered lower price repayments allowing clients to enjoy more of their annual income when compared to company-based mortgage pensions.
Recently, financial experts fear that there might be a resurgence of this subtle scam from the 1980s in a slightly different form. Nowadays, because of the reinstatement of people’s pensions freedom back in 2015 which allows people to drawdown as much of their pension pot as they want. Therefore, it is currently very easy to be drawn into a bad pension plan and you could have become a victim of pensions misspelling without your knowledge.
Pension Misselling – Take Action
If you believe that you may have been given bad financial advice and have been recently convinced to switch to a personal pension, or if someone has advised you to pursue a personal pension plan and abandon your company pension, then take action immediately. Complain with your company compliance officer. If the grievance procedures within your company do not seem to be going in your favor, then elevate the matter to the FSA (Financial Services Authority).
In any event, it is best to play it safe. Do not allow yourself to be sold into some alternative personal pension plan no matter how attractive the product seems at first.