The following article was written by one of my doctor clients and published in the “The Hospital Consultant & Specialist” magazine. I reproduce it here with his kind permission.
“Many people will never have heard of FSAVC pension plans. FSAVC stands for Free-standing Additional Voluntary Contributions, and the schemes were meant for employees to boost their pensions.
In the 1990s, doctors were a prime target for financial advisers selling these plans.
If you’ve never heard of FSAVC plans, you are unlikely to have one or to have the problems associated with them.
The sales pitch was that, if you did not manage to complete 40 years’ service to qualify for a full NHS pension, the FSAVC would make up the shortfall. High policy charges, commissions paid to the advisers and poor investment performance have resulted in FSAVC plans only providing a fraction of the returns indicated when sold.
If that wasn’t bad enough, the reduction in Lifetime Allowance and the introduction of the tapered annual allowance, subjects to be discussed separately, have further worsened the situation.
Financial advisers were legally obliged to point out other, often much better, options to boost income in retirement. However, because they were paid large commissions by the FSAVC providers many of them failed to do so. In the mid-90s, I, unfortunately, took out such a policy. When, about two years ago, I looked at the projected return, it became evident that I would have to draw my pension from that plan for about 40 years just to get back the amount I had originally invested.
At this point, I went back to the original advice I was given and started researching the matter. Very quickly it became clear that I had been very badly advised, and deliberately so. However, the company providing the advice had gone out of business in the intervening years and so initially I thought all was lost.
There are a few companies who will provide assistance to customers wanting to claim compensation for mis-sold pension plans. Some of the names will be familiar as they also offered to claim compensation for PPI. Anyone handling a claim for a client will take a percentage of the compensation, often in the region of 30 per cent plus VAT.
After speaking to several of these companies I eventually settled for a one-person business [Greg Vaughan Financial Services] as the advice I received seemed tailored to my personal circumstances. Furthermore, there were no extravagant claims as to how much compensation I could expect and the fee asked for was at the more realistic end of the scale.
My circumstances were further complicated by having moved from NHS superannuation to university superannuation and back again. Due to this complexity, the whole process took almost two years. Finally, though, I was awarded a substantial sum in compensation.
Although a poor decision in the past cannot be reversed, the effects can be ameliorated. It pays not to give up, and to obtain expert advice tailored to your circumstances.”