Did you, in common with almost half of all those who have been sent one, throw it on a pile with all the other official missives, to be ignored until red ink peeps out from the envelope?
If so, now is the time to retrieve that letter and reply to it. Unless you do, you may be throwing away the chance of a decent pension when you retire.
The letters are designed to discover whether you are one of the many hundreds of thousands of people entitled to compensation for wrong advice on pensions. A disproportionate number of the people affected are teachers, nurses, miners and other public sector or ex-public sector employees, who in many cases would have done better sticking with more generous employer- based pension schemes.
The amount of compensation, part of an overall bill for the pensions industry of up to pounds 4bn, could be pounds 50,000 or more per person, although most experts suggest the amounts are likely to average between pounds 3,000 and pounds 10,000. However, these figures do not take into account the interest such a sum will earn between the time it is paid and a person's retirement.
Importantly, unless you do something, you will miss out on this compensation - there are no plans to pay it automatically.
Consumer apathy and delays within the pensions industry have combined to slow down the reviewing of up to 1.5 million cases of possible mis- selling. A report out last week from the City's chief watchdog, the Securities & Investments Board, said the planned reviews were running late and that many people were still unaware that they might be entitled to compensation.
Last April, the Personal Investment Authority (PIA) drew up rules on how the compensation would be calculated and told its member companies - insurers and financial advisers - to identify all customers in one or more of the following categories:
q Pension opt-outs - where someone set up a personal pension, left the company scheme and transferred all their money from the company fund into it.
Research by Bacon & Wood-row, a firm of actuaries, suggested there were about 450,000 opt-outs, two thirds of which were made on the basis of a salesman's advice. Those involved were the most likely to have lost out. Their losses were also expected to be the greatest.
q Pension transfers - where someone who has left a job and gone to another starts a personal pension and transfers the money from the old employer's scheme into the personal plan. Bacon & Woodrow said there were likely to be about 600,000 such cases.
q Occupational pension non-joiners - where a person who had the choice of joining a company scheme or setting up a private one, opted for the latter. About 1 million people made this choice.
The PIA set deadlines by which people had to be contacted. It also determined the priority cases in the order that they had to be dealt with by insurers and financial advisers.
Urgent cases, totalling 350,000, had to be dealt with in the following order:
q 31 December 1995 - where policyholders are dead (their estate will receive compensation), people who have retired or are close to it. Also, any "opt-outs" aged 35 or over.
q 30 June 1996 - all "non-joiners" over 35 at the age they started a personal pension, plus "opt-outs" under the age of 35.
q 31 December 1996 - all "transfers" aged 35 or more at the date the switch into private pension fund took place.
But despite its original aim, the PIA has been unable to complete all but a fraction of the most urgent cases by the first deadline, and even fewer people have actually been paid any compensation.
Delays in the process were caused by legal action from some of its members, a boycott by thousands of financial advisers, and a long and bitter row with specialist insurers who were expected to meet the final compensation bill.
The PIA said last week that it now hoped to meet its final deadline of the end of this year for all three named categories. Its rules say that its member companies must make every reasonable attempt to contact their clients. This means sending a minimum of two letters to the last known address. In practice, most companies have sent at least three. Some are also using teams of telephone canvassers, visiting people in their homes and even trying to obtain new addresses if they have moved.
Even so, response rates from policyholders to date have barely reached 60 per cent. This is why it is critical for anyone sent a letter from their financial adviser or pension provider to send it back immediately. It may turn out that you have nothing to fear and the advice given to you was perfectly good. The reverse is equally possible.
And for those who have not yet received a letter, now is the time to contact your insurer or adviser. If you are in one of the three urgent categories above, you are entitled to a review. By contacting the company, you will set the process is motion.
For those who do not believe the compensation they are being offered is fair, there is still the option - albeit an expensive one - of seeking a better deal through the courts. Contact your union, professional body or local Citizens Advice Bureau for advice.
In the meantime, it is far better to act than to live your retirement years in relative penury. Opening that brown envelope has never been so important.Reuse content