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&#39Shortfall in pensions may bring calls to reopen misselling review&#39

A leading pension IFA is warning that the industry could face calls to reopen the pension review as compensation from misselling is buying policyholders only half the benefits of those who stayed in their final-salary schemes.

Richard Jacobs Pension & Trustee Services director Richard Jacobs says poor investment returns and annuity rates are leaving compensated pensionholders with retirement income less than half than that received by colleagues who remained in their schemes.

Jacobs says one client who transferred out of a British Steel final-salary scheme to a Guardian personal pension plan in 1989 has seen his pension benefits halved.

The individual received tax-free cash of £17,251 at retirement and a level annuity at £3,043 a year plus £593 a year with a 3 per cent escalator.

If he had remained in the British Steel scheme, he would have received £22,257 tax-free cash and £7,419 income with full inflation protection.

However, Guardian says it awarded redress in accordance with the FSA&#39s review guidance.

The Financial Services Ombudsman has looked at the case and says the correct procedures were followed. It has ruled out the chance of misselling cases being reopened.

Jacobs says: “As people are taking benefits, we are now seeing the end result of the pension review.

“It is a nightmare to think of this all being reopened but, on the other hand, if your client has lost out, you want them to get compensated.”

FOS head of communications David Cresswell says: “The compensation formula crystallised the loss at that point of time. You cannot come back years later.”

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