The Personal Investment Authority yesterday issued new guidelines detailing how hundreds of thousands of pension transfer victims should be compensated.
The regulator's rules explain how individuals may work out the amount needed in compensation to turn the clock back to the positition that existed before they were advised to leave their company schemes.
If reinstatement proves too expensive, insurers and financial advisers will be allowed to keep someone in a private scheme. But they may have to guarantee to match whatever benefits are available from the former company scheme. For those who have already retired or died, cash payments to them or their estate will be allowed.
The PIA's guidance says that the aim in each case should be "to restore the investor as closely as possible to the position he would have been if there had been no failure of compliance, taking into account any known changes of circumstances since the original advice was given".
Other factors to be taken into account include a company's charges. If increases to a personal pension are made, they must be enough to match anticipated previous benefits after expenses have been deducted.
Clients who cannot be restored to their former occupational scheme will also be entitled to have future salary increases and their total years in service taken into account.
"Where the investor is still in relevant employment and re-admission [to a company pension scheme] is not available, the expected future service must be assessed on an individual basis," the PIA said yesterday.
Advisers are expected to have completed the bulk of urgent cases by the end of this year.