Did You Opt Out OF SERPS? Was It The Right Move…
It has recently been announced that the number of complaints from people who were potentially mis-sold State Pension opt out plans soared last year. Rising from 115 in 2005 to 954 in 2006, there is concern that many many more people may have been wrongly advised.
The plans centred around the opportunity to leave the State Earnings Related Pension Scheme (SERPS) or the more recent State Second Pension (S2P) and receive a national insurance rebate to start the new pension plans.
The problem is that while everything was upfront, and all payments were in line with the guidelines, there were some pretty hefty commissions paid. These commissions not only effect the short term value of the funds, but also result in less money to reinvest (and hopefully grow year on year) - with some people up to 40 years from retirement, the results could be fairly dramatic.
The Financial Services Authority are now suggesting that up to 120,000 people may have been mis-sold these plans and wrongly advised to opt out of SERPS / S2P. The industry will be undergoing yet another review of individual cases, in a chilling scenario to the more recent pension mis-selling scandal.
While it is estimated that the average loss per person will only be in the region of £7 a week, this can add up to a fairly hefty sum for those who enjoy a long retirement. It seems that every time the government try to sort out the pensions problem in the UK, another problem appears. This is starting to have a serious effect on the public’s trust of the industry, and will not help the government’s long term target to reduce the state pension liability.
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