Regulation  

Sesame told to pay over pension advice

Sesame told to pay over pension advice

Sesame has been reprimanded by the Financial Ombudsman Service after an adviser told a woman to transfer her occupational pension scheme to a personal pension.

The women – known as Mrs C – described herself as having a “balanced” approach to risk but was advised to transfer into a personal pension that would have needed to achieve 7.1 per cent annual growth to mirror the benefits of her occupational scheme.

Ombudsman Alison Cribbs said: “I agree with the adjudicator that this is too high, given Mrs C’s stated attitude to risk.

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“So I am not persuaded that the advice given to Mrs C to transfer her pension to a personal pension was suitable.

“I think that the advice should have been to keep her existing pension benefits. And I think that Mrs C would have acted on that advice.”

Mrs C was 40 years old when she contacted the adviser in 2000, had a retirement age of 60 and was self-employed.

She had deferred pension benefits in her occupational pension with more than 17 years’ pensionable service, which represented the majority of her pension provision.

Ms Cribbs noted the critical yield needed if Mrs C had decided to retire at age 55 was 4.8 per cent.

But she pointed out Mrs C had said in the questionnaire that she didn’t think she would be able to afford to retire early.

She ordered Sesame to contact Mrs C’s former employer to see if it would be willing to reinstate her into her former scheme at Sesame’s expense.

If it isn’t possible for Mrs C to be reinstated into her former scheme, Ms Cribbs ordered Sesame to carry out a loss calculation using the methodology set by the regulator, but using the latest assumptions published for cases that fall outside the review.

If a loss is found then Sesame should pay redress in line with the methodology for the pension review.

If it isn’t possible to pay the redress into a pension arrangement for Mrs C then Sesame should pay the redress direct to Mrs C as a lump sum, reduced by Mrs C’s marginal rate of tax.