A father-of-two has received £85,000 in compensation after being wrongly advised to transfer his pension into an unsuitable overseas scheme.
The 68-year-old former senior executive had over £800,000 saved in defined benefit and individual pension schemes - money he'd accumulated throughout his career.
But in 2017, he was wrongly advised to transfer this money into a qualified recognised overseas pension scheme, known as (QROPS).
A QROPS can be the right choice for people who have left the UK to emigrate permanently and intend to retire abroad having built up a British pension fund.
Alternatively, a person who is born outside the UK having built up benefits in a UK-registered pension scheme can move their pension offshore if they want to retire outside the UK.
The incorrect advice was provided by the now defunct Omega Financial Solutions and resulted in the claimant and his wife having to pay numerous administration fees which they wouldn’t have had to pay in their original pots.
On top of this, the couple lost out on thousands of pounds worth of interest which they would’ve accumulated in their previous schemes.
The couple, who have now moved from the UK to overseas, sought legal advice in July 2020 and contacted Liverpool-based High Street Solicitors who raised a legal case.
They were awarded £85,000 in compensation from the Financial Services Compensation Scheme (FSCS) - the maximum possible compensation.
High Street Solicitors turned to compensation watchdog the FSCS as Omega Financial Solutions had gone into administration making it impossible to file a legal case against them.
The FSCS’s decision was based on the hypothetical value of the pension had the couple not transferred it into an unsuitable scheme.
The dad-of-two said: “Initially, I was sceptical to seek legal advice, and although it was a long process, the Financial Mis-selling team explored every avenue and ultimately, secured £85,000 in compensation.
"I’m delighted that the FSCS could see that we did have a claim and we have been able to recover some of the loss and costs we’ve paid out.
Julie Adams, at High Street Solicitors, added: "Receiving negligent financial advice can be devastating for clients and their families.
"In this case, the gentleman was subjected to a series of administration costs, whilst also losing out on thousands of pounds of interest."
Some pension savers could be thousands of pounds worse off if they fail to shift older pots into ones offering better value for money, the IFS (Institute for Fiscal Studies) today warned.
Many working-age people have pension pots that they are no longer actively contributing to - and there are concerns that these pots could provide declining value for money over time if savers do not engage with them.
The research looked at defined contribution pension pots which people were no longer contributing into but were yet to start drawing money out of.
It found that many held by a sample of people aged in their 50s are in schemes with charges that are high compared with current market standards.
The average annual fee for deferred pensions taken out in the 1990s is above 1.1% of fund value, but this falls for pensions taken out in the 2000s to about 0.9% and for those taken out in the 2010s to about 0.8%, the IFS found.
Small differences in percentage points can add up to big differences in the amounts of cash accumulated over time.
For example, for a 50-year-old with a pot of £21,000, the difference between a 1.1% and a 0.8% charge would amount to about £2,400 by the age of 67 in today's prices, researchers estimated.
Higher fees do not necessarily mean someone will get more for their money.
Under government plans, savers will be able to see all their pensions together online through a new dashboard scheme - but not for another four years.
Pensions dashboards allow people to access information about all their pensions in one place online.
Seeing all the information pieced together for the first time could help people to plan for retirement and make the most of their savings.
A consultation on the draft regulations around the new dashboards has been published by the Department for Work and Pensions (DWP).
Schemes will come on board in three waves under the plans, with large schemes jumping on between April 2023 and September 2024, medium schemes between October 2024 and October 2025 and the smallest schemes expected to come on board from 2026.
Tom Selby, head of retirement policy at AJ Bell, said: "Anyone expecting dashboards to be launched immediately with bells and whistles attached might be disappointed by the relatively slow staging timetable outlined today.
"Some savers may need to wait over four years to see all their pensions online via dashboards, although for those with pensions in larger schemes it should be much faster.
"The Government has understandably focused on getting the biggest schemes to comply first as this is where the majority of pensions are held.
"Once a 'critical mass' of schemes has been reached and prototypes have been fully tested, dashboards will then be made available to the public."
