- TUC asks MPs for action on pension targeting
The TUC (Trades Union Congress) has told Members of Parliament that steps to halt advisers from ‘targeting’ DB pension schemes is needed.
Recently, Final Salary Pension transfer values have been quite high, and some believe this has prompted some financial advisers to “target” them for a pension transfer, despite generally exposing those pension pots to more risk in DC (Defined Contribution) pensions.
What does the targeting of DB pensions look like?
You may receive an introduction to, or even a cold-call from a financial adviser or marketing company that may go as far to downplay the value and benefits of your workplace final salary pension, instead telling you that because of it’s high-transfer value, it could give you more money in retirement if you transfer it away to a scheme of their suggestion.
The difficult bit is, that this could be true! But Get Claims Advice deal with incidents everyday where those pension transfers haven’t panned out, and it all comes down to risk.
Increased risk in DC Pensions.
Let’s take a SIPP as an example (after-all, the majority of cases we deal wgith involve SIPPs). Whereas your DB pension is relatively safe, backed up by your employer, a SIPP would only pay out if the investments inside it perform. If those investments are high-risk, you could lose the lot!
Weighing up the risks can be difficult, which is why people seek financial advice, but if your IFA is negligent, or worse, actively ‘targeting’ your DB pension as the TUC suggests, then you could end up in a sorry spot.
You can read more about negligent advice and SIPPs and what you can do about it on our dedicated page.