The FSAVC issue
FSAVC policies levy high charges (necessary to pay the salesman’s commission and to cover the cost of administration) which act as a ‘drag’ on performance, lowering the policy value. In contrast, company AVC schemes are usually free of charges because there is no salesman’s commission and the company will often subsidise the cost of administration.
If your company scheme is the so-called ‘final salary’ type (i.e. you receive a guaranteed proportion of your final salary at retirement; the exact amount determined by your length of service) then you can normally buy extra years of service to boost your pension. Pensions from such ‘added years’ schemes, as they are known, are not subject to risky stock market movements and thus tend to produce much higher pensions than FSAVCs.
When the Conservative Government allowed insurance companies to muscle into the AVC market in 1988, a whole series of complex selling rules and regulations followed. The purpose was to try to ensure company AVC schemes weren’t ignored or denigrated by insurance company salesmen purely for the sake of earning commission on FSAVC sales. There was meant to be a level playing field between FSAVCs and AVCs so that people could make a properly informed choice between them.
However, many insurance companies either did not understand these rules, or did not train their salesmen properly, or simply made no real attempt to implement them.
As a result, FSAVC policy sales soared (over one million have been sold in total) when most of the people who were sold them would have been much better off investing into their own company AVC scheme. Losses are usually substantial and compensation for being mis-sold an FSAVC plan can run into tens of thousands of pounds. Payouts include £82,467.36; £48,000 and £40,074.34. You can see the amounts won over recent years in these PDFs: (click for evidence). (click for evidence). (click for evidence). (click for evidence).
It is yet another pensions scandal that has been hidden from public view. I’ve had considerable success winning compensation for FSAVC mis-selling so please contact me so I can help you get your pension back on track. And don’t worry if you have already stopped paying into your FSAVC policy – it won’t affect your claim.
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