Have You Been Mis-sold Your QROPS Pension or Other Pension Scheme?

Since the 1980s, the financial service industry both in the UK, Spain, and other countries abroad, been making a lot of money from selling pensions. Unfortunately, many of these pensions have been mis-sold. For many expats as well as UK residents, this has meant huge financial loses. Some have even lost their entire pension pot.

QROPS Pensions

QROPS stands for Qualifying Recognised Overseas Pension Scheme. When it comes to overseas pensions schemes, this is perhaps the most common pension scheme ex-pats may have found themselves talked into. It sounds great on the surface of it, but in the long run, a QROPS investment can be an expensive mistake.

Funds held in UK pension schemes have been transferred into QROPS often with companies which are not properly regulated. The initial point of contact is often a cold call and the operator may even come across as slightly aggressive.

The caller makes the QROPS sound great, and ex-pats often commit to them in their droves without having checked out the nature of the investment and the alternatives. They are promised a lump sum and a new pension in an overseas territory. 

The truth is that companies do not offer QROPS schemes out of the goodness of their hearts. Financial brokers and investment firms make a small fortune out of selling these schemes. Commission rates vary a great deal, and you can end up paying anything from £8,000 to £30,000. There is little wonder why companies insist on them being such a good investment option.

Most QROPS schemes are not a good investment option for you. Instead, they really only make financial sense to the financial adviser or investment company selling them.

Self Invested Pensions (SIPP)

SIPP style pension schemes were mainly sold in the UK. On the surface of it, they sounded great but it would appear investors may have lost millions. SIPP pension schemes are set up to hold high-risk investments with high charging structures. Investors have commonly transferred their private or employer's pension into a SIPP after having been promised high returns.

If you have invested in a SIPP, it could be a good idea to find out what your pension is now worth, and at the same time, you should make sure you understand the charging structure. 

Occupational Pension Schemes (OPS)

Occupational pensions schemes are often set up by unregulated companies to try to avoid the proper advice process. We have heard a lot about them recently thanks to employers the likes of Sir Philip Green. OPS plans are mainly set up by employers to help their employees save for retirement.

Most OPS schemes fall within three categories:

1. Benefit pension schemes
   
2. Contributory pension schemes
   
3. Cash balance plans
   

The employer is often required to pay in and contribute towards the scheme. Most employers like to match their staff's contribution.

You should always review your pension arrangements. However, do not take the advice of cold callers. If you are thinking about making changes, speak to an independent financial adviser, or maybe speak to a couple to make sure that you are familiar with all of the options available.