The Financial Conduct Authority (FCA) has been looking closely at all pension schemes or pension advice by advisers. One of the areas that is causing its concern is the mis-selling of pension annuities.
What is a Mis-sold Pension Annuity
In simple terms it is a conversion of your pension plan savings into a regular income paid either on a monthly or annual basis until you die. The income level is based upon your own life expectancy. So if for instance you are a smoker this can shorten your life expectancy. At which point we would expect the annuity to pay a higher amount as in all probability you would not live as long as somebody who doesn’t smoke. This is the main issue.
The ‘enhanced’ nature of an annuity is the main aspect of any mis-sale in that if you do have a medical condition or what is perceived as a medical condition such as being overweight your pension annuity provider should be topping up your income to accommodate the likelihood that you will die sooner than somebody who does not have a medical condition.
Shopping around regarding annuities can or will have assisted if an annuity is in place but again financial advisers didn’t necessarily do this and the annuity provider should have advised that benefits from other providers could be more substantial.
Again with anything to do with annuities this can not only affect the person who has the annuity but also their spouse or partner. In the event of death there is a possibility that policies can be reviewed.
Due to the nature of annuities and the options that should have been provided coupled with the concerns that the financial conduct authority have their investigations of late if you do have an annuity scheme then it is worthwhile checking this either independently or we would be delighted to do so all on a no win no fee basis. Our fee if successful is 20% plus VAT (24% equivalent)
Frequently Asked Questions
What is a Pension Annuity?
A pension annuity is a scheme available to draw a pension on a regular basis upon retirement.
What can go wrong with a Pension Annuity?
Pension annuities are based on several factors one and probably the most important is your health, as the amount received is based on this
Are Pension Annuities good?
Pension annuities as with any other form of pension are good but the advice in taking one of these products has to be correct and meet with your current and future financial situation.
Why would a Pension Annuity be missold?
A pension annuity would be mis-sold if your personal situation and health is not taken into account when deciding on the pension product.
Why is a mis-sold Pension Annuity bad?
A pension annuity not being sold correctly can have a considerable financial impact in that your agreed benefit could be far lower than it should be, constricting your income.
Should you check your Pension Annuity?
If you have a pension annuity it is worth checking to make sure that it is fair and appropriate and that the scheme provides the correct financial benefit to you.