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Pensions Misselling Scandals
While for many people, the pensions misselling scandal of the 1980s is already a distant memory, the truth is that it was not too long ago when people just like you were contracting out of their State Earnings Related Pension Schemes (SERPS) in order to pursue what seemed like higher paying personal pension plans with lower fees and charges. Of course, over time, it became clear that there were too many risks involved with some of these personal pension plans and there was no guarantee as to how the pension would actually perform. The result is that while the possibility did indeed exist that these personal pension plans would perform well resulting in huge losses for the pension-holder. In fact, without any safeguards and guarantees, there is even a chance that a poorly performing pension plan could result in no zero pay-off for the pensioner.
Still, even with all these risks involved, millions of people back in the 1980s and all the way up to the early 90s actually contracted out of their SERPS and into these shady pension plans – most of them were led astray by the aggressive advertising that insurance companies launched during that time. Furthermore, the government was actually encouraging people to contract out of their SERPS and into a commercial self-invested personal pension (SIPP) at that time, this has resulted in pensions misselling scandals.
Of course, history speaks for itself and due to the overwhelming number of poorly performing SIPPS this resulted in huge losses that eventually caved in on the pension plan industry itself.
The Appeal Of SIPPs At A Glance
At a glance, SIPPs are quite appealing because they allow for more financial freedom as to what happens with your contributions. Furthermore, the government allows tax rebates on contributions in exchange for limits on accessibility. In a SIPP structure, the member is actually allowed some ownership of the assets and given the freedom to choose from a range of allowable investments. In practice, this means that the investor is actually allowed to make choices as to what types of assets are bought, leased or sold – subject to the agreement of the SIPP trustees, which would generally be the provider of the pension plan. These investment assets can range from stocks and shares to gold buillion and investment trusts.
Pensions Misselling Scandals The Risks Involved
The financial services industry actually benefited a lot from the aggressive sales tactics used by insurance agents at the peak of the 1980s pensions misselling scam. The reason that these sales were so successful is that the financial advisors would withhold critical information from the investors regarding the risks involved in switching or contracting out from SERPS to SIPPS.
In Modern Times
In modern times, self-invested pension plans are still allowed to be sold but with certain safeguards involved. For example, the company selling the product must provide the client/investor with an information pack as to the personal pension scandal from the 1980s.
Furthermore, if you feel that you have been victimized and are a victim of pensions misselling scandals, you should try to recover directly from your pension provider. The government has also put up a fund from which you can recover up to £50,000 if you have suffered losses from being a victim of pensions misselling scandals.
If you’ve got any questions regarding this or you’d like to know more about making a claim, please call out team on 0161 850 9069.