MONEY Q&A: Was I mis-sold a pension? What can I do?
Sunday 14 March 1999
I am 54 and took out an FSAVC (free standing additional voluntary contribution) scheme 10 years ago.
Was I ill-informed about this policy, since I was assured it was much better than using my money to buy extra years' membership of the main teachers' pension scheme?
Can I have the policy reviewed in the same way as the sale of personal pensions is being reviewed?
The policy has not performed as well as I had hoped. Also, I have a personal pension plan based on separate part-time earnings. Can I transfer my free standing additional voluntary contribution to my personal plan?
If you think you have been mis-sold a pension or any other investment you do not have to wait for formal action by the regulators. You can initiate your own formal complaint, first to the person or firm that gave you the advice, then, if you fail to get satisfaction, through the regulatory procedures. A good starting point for free advice is OPAS, the occupational pensions advisory service (0171 233 8080).
This independent body deals with complaints about FSAVCs and personal plans as well as employers' pensions.
You say your FSAVC has not performed as well as you had hoped. Unfortunately, investment performance is not usually relevant when considering whether you have a case for complaint and compensation.
What is relevant is whether your adviser took account of all your circumstances and all the options available to you at the time and, 10 years' ago, gave you best advice.
If you had the option to buy additional past years' membership of the main teachers' pension scheme, the chances are this could be considered a better option than an FSAVC plan. Bear in mind that FSAVC plans first went on sale in October 1987. The Financial Services Act, which set up the system of investor protection, did not come into force until 29 April 1988. Investments sold prior to this date are outside this scope.
On your other point, different forms of pension are generally transferable, though com- plications can arise. The big stumbling block is often the transfer value given, and you ought to get advice
I find my current account can have a balance of between pounds 1,500 and pounds 2,000 for a fortnight or so each month because of the dates my salary goes in and the dates large payments, such as the mortgage, go out. I use my credit card for much of my regular expenditure and clear the balance in full each month.
Are there current accounts which will pay interest on credit balances?
Hardly any current accounts pay meaningful interest. Some that pay better rates (and better is a strictly relative term) also charge a monthly account fee even when you are in credit.
If you really want your money to work for you, you may have to look for a savings account that will accept your monthly salary and from which you can make a regular transfer to your current account, preferably by standing order or, failing that, by phone. But you would need to be very well-organised and confident that your current account won't go overdrawn during the period your salary is sitting in the savings account.
For some high-earners this sort of arrangement is worthwhile. But do your sums. For example, assume you have an average balance of pounds 2,000 for 26 weeks of the year. Assume you could earn 5 per cent gross (which could be optimistic if interest rates fall further). The net gain to you would be just pounds 40 a year or pounds 30 if you are a higher-rate taxpayer. And even less if you have to take account of phone costs.
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