What Are Your Options if Things Go Wrong With Your Pension?

You’ve spent your whole working life putting money into a pension for your retirement, only to discover that your nest-egg might not be everything you’d hoped it would be. If things go wrong with your pension, there are organisations that can help you.

In this guide, we explore your options if things go wrong with your pension.

Your State Pension

If something goes wrong with your State Pension and you wish to make a complaint, your first point of contact is The Pension Service who will respond to you within seven days.

However, if you have a complaint relating to your National Insurance contributions, you will need to contact HM Revenue & Customs (HMRC).

If your complaint is still not satisfactorily resolved, you can go through the relevant tribunal.

If your complaint concerns any other form of pension, you’ll need to direct your enquiry depending on the nature of the issue.

Badly administered pension schemes

If you have a complaint regarding how your pension scheme is being administered or managed, in the first instance, you should contact the pension company through which you joined the scheme. That could be the pension provider or a professional financial advisor.

If you can’t resolve your complaint in that way, you should contact the Pensions Ombudsman who provides a free service that’s aimed at settling this kind of dispute.

Incorrect selling and marketing of pensions

If you think you were given incorrect information about your pension or were wrongly advised at the time you signed up for it, you should pursue your complaint through the pension provider or the financial advisor who sold you the product.

If you’re not satisfied with how your complaint was handled, you should contact the Financial Ombudsman Service (FOS). Common complaints that are dealt with by the FOS include instances where someone was advised that a personal pension plan was their best option when they should actually have joined their workplace pension scheme.

What if your pension provider goes bust?

If the company from which you bought the pension plan goes bust or goes into insolvency, meaning that it cannot pay you the money you’re entitled to, you should contact the Financial Services Compensation Scheme (FSCS).

Occupational pension schemes

If you belong to an occupational pension scheme, your employer must, by law, have a formal complaints procedure. So, if you have a complaint about your workplace pension scheme, your first step should be to consult your HR department on what you need to do.

If the event that your employer is unable to resolve your problem, contact the Pensions Advisory Service. Failing that, take your complaint to the Pensions Ombudsman.

What if your employer goes out of business?

If you belong to an earnings-related, final salary, or other defined benefit pension scheme and your employer goes out of business, there may not be enough money left in its scheme to payout. In these circumstances, you may be able to get help through the Pension Protection Fund (PPF).

Note that the amount of compensation you receive will depend on your circumstances:

  • If you are retired, are already drawing a pension, and are beyond your scheme’s usual retirement age, the PPF will usually continue paying you the same pension you are already receiving.
  • If you took early retirement and you’re currently drawing your pension, you’re entitled to claim 90% of your pension, subject to a yearly “cap.” The amount of the cap is dependent on the date the company went out of business and on your age. Current cap rates are shown on the PPF website.
  • If you haven’t begun drawing your pension when you attain the normal retirement age for your scheme, the PPF will provide 90% of the income you would have been entitled to through your pension, using a cap as outlined above.
  • In every case, your pension will rise in line with inflation for contributions that are made from 5 April 1997, currently subject to a maximum of 2.5%. Any part of your pension that is based on contributions made prior to that date will remain unchanged.

    Complaints about financial advisors

    If your complaint relates to a financial advisor, you should first try to resolve your grievance directly with them. If you are unhappy with your financial advisor’s response, you should escalate your complaint through the Financial Ombudsman Service, who will help you.

    If your grievance relates to money that you lost because of bad advice, but your financial advisor is no longer in business, contact the Financial Services Compensation Scheme for further help and advice.

    In conclusion

    If you have paid into a pension scheme and things have gone wrong, or if your pension was mis-sold to you or you were given bad advice, you may be entitled to compensation. In either case, don’t despair; there are organisations available to you with the systems in place to make sure that you are not out of pocket once you’ve left work.