You’ve been dutifully contributing to a company or private pension for years, maybe even decades, but then – perhaps when you’re about to retire – they suddenly change the rules.
As a result, it looks like you could be losing hundreds or even thousands of pounds every year.
Decades ago, pensions were a wild west, with a series of scandals sending confidence plummeting, whether it was massive mis-selling of personal pensions, workers losing money when their employers went bankrupt, or Equitable Life customers seeing their retirement savings wiped out was cut.
Stricter rules and regulations are now in place, but in recent weeks Guardian Money has heard from a number of people who are worried about their retirement savings. Two people are here to tell their stories.
‘Boots is a brand I trust
Anne Harding is one of more than 20,000 current and former employees at Boots who say they could be losing thousands of pounds, sometimes hundreds of thousands of pounds a year, due to changes to their pension schemes “overnight” Thousand pounds.
They are now often forced to wait another five years for their full pension. Campaigners say some people may now delay claiming their pension, but for many there will be no time to revise their financial plans, meaning they are forced to accept a reduced pension.
Last November, the health and beauty retailer Get rid of multi-billion pound final salary workplace pension scheme Insurance company Legal & General assumed its assets and liabilities. Many large employers have been doing this in recent years to shed pension “risk” so that they can focus on running their core businesses.
Boots plans to stop accepting new members in 2010. Boots Pensions Support Group, an action group, estimates there are around 23,000 members who have not yet retired and started receiving a pension.
The organization said for decades members had been able to receive full pension for free from age 60, but Boots said this was never guaranteed and was a discretionary benefit that has now ended. This means members must now wait until age 65 to receive their full pension. They can retire before then, but if they claim their pension before age 65, they will lose a chunk of their pension.
Harding, who turns 59 this month, worked for Boots from 1992 to 2003 as a human resources officer at its base in Beeston, Nottinghamshire. She said she had always understood she was entitled to a full pension at age 60, based on information conveyed to her over the years.
She relied on this when she decided to retire in June last year, then used drawdowns to fund the 18 months until her Boots pension was fully enacted. But a few months later, she received a letter saying she would have to wait another five years. Although she planned her finances based on the initial offer she received, it would still be years before she could collect her full pension. gold.
“My husband and I are both retired and now very worried about our finances,” Hardin said. “Boots is an employer and a brand I trust… If I had realized I wouldn’t be able to claim my full pension when I turned 60 in 2025, I would have made a different decision.”
She said Boots had not provided her with information about the financial impact of taking a reduced pension when she turned 60, but added: “Based on what others have said, I expect my lump sum will be reduced by around £4,500 per annum. “My pension will be reduced by around £4,500.” My pension has been reduced by £900 – easily a total reduction of £30,000 based on average life expectancy. “
For others, the financial impact is greater, the action group said. For some people, this could cost them between £1,000 and £4,000 a year, in addition to affecting the lump sum tax exemption they can receive.
The PDA (Pharmacists’ Defense Association) union has been investigating and Said it a few days ago Its initial view was that “there is no evidence to support [company’s] Claims that the unreduced pension from age 60 is discretionary”. It suggests that the dispute may have to be Pensions Ombudsman.
The trustees of the Boots scheme said in a statement that they recognized the change would impact members who choose to retire before the scheme’s normal retirement age (NRA). “While trustees have been able to offer enhanced early retirement provisions in the past, this has always been… discretionary. It has never been an automatic entitlement for members,” it added. “Continuing to pay unreduced pensions to those members who choose to retire early will make Legal & General’s scheme insurance unaffordable.”
Trustees said members can still receive their full pension from the NRA without any reduction. The retirement age for most members is 65, while the current national retirement age is 67. It added that some transitional arrangements were already in place.
The statement added: “The trustees did not take this decision lightly but in the collective interests of all members and based on independent, professional advice to safeguard the long-term financial security of the scheme.”
Legal & General said it had no input into the scheme’s rules.
‘My pension has effectively been held to ransom’
Jonathan Booth is one of about 17,000 people struggling. some call it a scandal Involving failed pension company Hartley Pensions.
He will turn 65 in early March but said the events of the past 18 months or so had left him “pushed to the edge of despair”, adding: “I want to start planning my retirement” [but] I don’t think I can retire. “
Like many people, Booth had accumulated multiple pensions over his working life, and when he spoke to a financial adviser a few years ago, they suggested he consolidate them into a pension fund run by Hartley Pensions. Operating a self-invested personal pension (Sipp).
He had hundreds of thousands of pounds in his chypre. “These are all my retirement savings,” said Booth, a manager of a nonprofit organization who lives in Hertfordshire.
In July 2022, it was announced that Hartley Pension was under “Violation of regulatory requirements”, accounting firm UHY Hacker Young is managing its affairs and trying to find a buyer.
The company’s financial records were in shambles, so administrators banned people from transferring funds to other pension providers. For a time, people were also concerned that they might be charged high fees to pay government fees.
Booth said his financial adviser told him not to worry, but he said the whole incident caused tremendous stress and anxiety.
“I still can’t transfer my pension and there’s no timetable,” he said. “I don’t think I can retire just yet.”
Booth said he would not feel safe unless he could transfer his pension to a “stable and trustworthy” provider.
For Booth and others, some positive news may be on the horizon: UHY Hacker Young says pension transfers from Hartley are expected to begin in April and letters will be written to all pension holders soon , explains how to proceed.
“We recognize that the administration period is a very stressful time for clients,” said Peter Kubik, partner at UHY Hacker Young. He added that an agreement with the Financial Services Compensation Scheme has been reached for several Funding the million-pound administration fee “is a positive outcome for customers. As a result… Hartley pension holders will not have to pay anything to the government.”
Your rights under the pension scheme
Investing in a pension is one of the biggest financial commitments most of us make, and if you’re worried about your provider or they want to change your plan, you have rights.
If you have a complaint about your personal pension, please contact your provider first. Financial companies have up to eight weeks to resolve complaints.If you are not satisfied with their final response, or there is no response, you can ask Financial Ombudsman Service Go figure it out. This will cost you nothing and you will not need to pay anyone to represent you. However, you need to make your complaint to the Ombudsman within six months of the date of the final response letter.
You can also contact Pensions Ombudsman. If you are a scheme member or beneficiary, it can help resolve complaints or disputes about a workplace or personal pension scheme. However, the Pensions Ombudsman has seen a significant increase in the number of cases it receives, which is causing delays – Guardian Money has received information that their complaints are taking almost a year to be allocated to experts.
If you have concerns about your workplace scheme – for example, about late payments, or something that makes you suspect the scheme is not running properly – you can report these to Pensions Regulator (TPR), Protecting Occupational Pensions in the UK.
If you have a pension and the provider or adviser collapses, you may be able to ask Financial Services Compensation Scheme (FSCS). If the bankrupt company is your pension provider, the FSCS can usually pay 100% of your claim, with no cap. But if your provider is a self-invested personal pension (Sipp) operator, the rules are different. If the Sipp provider fails, compensation is usually capped at £85,000.
If your occupational pension scheme fails, you may be covered by: pension security fund (PPF). This protects people from receiving a “defined benefit” (also known as final salary) pension when their employer goes bankrupt.
Any complaints about the State Pensions must be submitted to department for work and pensions.
All UK employers are required by law to provide a workplace pension scheme. Your employer must automatically enroll you in the scheme and pay your pension if you: Comply with “automatic registration”. For example, it cannot encourage or force you to opt out of the plan. Additionally, your employer generally must transfer your contributions to your plan or provider by the 22nd of the month after they are deducted from your paycheck .
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