personal finance

‘It’s sickening to discover your security’s gone’: how I lost my pension


Lynn Allwood worked for Birmingham Local Authority for 20 years and paid into a pension throughout that time. When friends began voicing concerns about how their pensions were performing, she started to think about her own pension arrangements.

“We’d recently lost a lot of money as a result of a failed business, so we were keen to do something to try and recoup a little of what we’d lost,” says Allwood. “I didn’t know much about pension schemes but I was interested in finding out whether there was anything I could do to make mine work a bit harder.”

Through friends, Allwood and her partner heard about an investment opportunity with a hotel and resort development in Cape Verde. She made further enquiries and a representative from CIB Life & Pensions arranged to visit the couple at home.

“The financial adviser said we could just fill in some paperwork and he’d do the rest – my partner had a private pension, so we could combine our pension pot and transfer it into the investment scheme,” she says.

With the combined investment, the couple were told they could invest in two properties: a one-bedroom apartment and a studio flat. “We didn’t have enough money to buy both properties outright, but we were told that we could get a small mortgage on the properties once the building work was complete, and that the rental income would cover that expense,” says Allwood. “We wouldn’t be able to stay in the properties, as they were part of a pension investment, but we were assured the properties would effectively pay for themselves and we’d own investment apartments in Cape Verde. It all sounded great.”

A few months later, the couple were told that the mortgage had fallen through, meaning they could only buy one property. After the purchase of the apartment, CIB said there was some money left over that it could invest on the couple’s behalf. But when CIB subsequently closed down, the couple found that even though the resort was complete, the 6% return they had been promised was in fact closer to 2%, due to admin and maintenance fees, cleaning charges, and gas and electricity bills.

“Discovering that you’ve been given bad financial advice is sickening; it’s a horrible feeling to realise that all your security has gone and you have nothing to leave your children,” says Allwood.

“We’re no spring chickens and we’ve both worked hard since we were 16, yet suddenly we had nothing to show for it, and the prospect of retiring had became a luxury we couldn’t afford. I kept asking myself why I’d been so silly – yet we did all the research we could possibly have done before we invested our money. We had no way of knowing we’d been given bad advice.”

Through friends – who also lost money investing in the resort – Allwood discovered that it was possible to claim compensation for pension mis-selling. She contacted a claims company to ask for advice.

“The claims adviser was shocked when I said that I’d worked for the local authority for 20 years and that mine was a local government private pension,” says Allwood. “He said that was the ‘creme de la creme’ of private pensions and that I should have never been advised to transfer it.”

The claims company made a claim to the Financial Services Compensation Scheme (FSCS) on behalf of the couple. “We just had to fill in a few missing bits on the claim form; it was amazingly simple,” says Allwood. “Our claims adviser was always available to speak to and very good at keeping us informed throughout the process, which was very reassuring.”

Allwood and her partner have never visited Cape Verde and don’t intend to, but they’d like to sell their property. “When we invested, we were told the apartment would be worth £120,000 but the latest valuation is £40,000,” she says. “The additional money that CIB invested on our behalf is still out there in a bank account somewhere.”

In October 2018, FSCS awarded the couple £50,000 in compensation for unsuitable investment advice. Allwood says the compensation has helped the couple to move forward from the experience.

“We’ve squirrelled it away in a savings account and I don’t care that it’s not earning the highest possible rate of interest because at least now I have peace of mind; I know what I’m going to get back and it’s guaranteed, so I know exactly where I stand,” she says.

To anyone considering pursuing a compensation claim, Allwood has one piece of advice: pick up the phone and make the call. “You’re not obligated to follow through if you decide not to, but you’ve got absolutely nothing to lose by making an enquiry to see if you’re eligible to make a claim,” she says.

“We didn’t think we’d ever get anything back, but we felt it was worth pursuing almost as a matter of principle. We’re not the only ones who’ve been caught out and compensation doesn’t take the experience away, but without it the whole situation would feel a lot worse. We feel so much better than we did six months ago. At least now we have a little bit of security again.”

For more information about how FSCS protects your money, visit www.fscs.org.uk



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