Are you wondering what mis-sold pensions are? What do you need know about them? Refer to the following brief guide for information about these schemes.


Unfortunately, on the faulty advice of their financial advisors, thousands of UK citizens every year pull out their savings to invest in risky and unregulated retirement schemes. Little do they know that they have invested a big chunk of their hard-earned life savings into investments that carry significant risks and deliver inadequate returns.

However, fortunately, there’s also good news. That is, a greater percentage of people are receiving compensation for mis-sold pensions.

A mis-sold pension refers to an arrangement where a person is persuaded to invest in a pension scheme based on misleading advice. Retirees can be compensated by making mis-sold pension claims via claim management companies.

If you’re wondering what a mis-sold pension is and what you must know about it, refer to the following brief FAQ guide. Use this article to get yourself diligently informed.

Q1: What Is a Mis-Sold Pension?

In simple words, mis-sold pensions are real-life circumstances where you are influenced into investing in a new, unregulated pension scheme. This especially applies if you are following the guidance of your financial advisor who doesn’t inform you of possible results. In most cases, these schemes usually promise a much higher return on investment than anyone can reasonably expect.

Therefore, if you received inaccurate financial advice when investing in a pension scheme, the Financial Conduct Authority (FCA) refers to this situation as a mis-sold pension. In these cases, you could be able to claim compensation.

Q2: What Are Mis-Sold Pension Claims?

A mis-sold pension claim is a legal way of holding those parties accountable who were careless about providing accurate financial advice when explaining a pension scheme’s associated risks. You can also file a claim if you believe your financial advisors did not give you enough information about the procedure. As a result of faulty advice, therefore, you went into retirement with a product that was not right for you.

Moreover, if your financial advisor doesn’t prioritize informing you about all possible risks, you can claim compensation. You need to do this through a claim management company.

The compensation usually varies from case to case, depending upon your situation, specifically considering the size of your pension pot. However, an average compensation amount claimed for pension mis-selling is typically around £25,000 for private pensions and £50,000 for final salary transfer pensions.

Q3: What Are Some Commonly Mis-Sold Pensions in the UK?

1. Self-Invested Personal Pension (SIPP)

Self-Invested Personal Pensions (SIPP) are typically high-risk, sub-prime, under-performing, and illiquid investments. They are designed with unnervingly high charging structures. In these pension schemes, you don’t have to involve a financial entity to look the deal over. Instead, you can enter an agreement with the pension provider and begin transferring your payments immediately.

A few examples of SIPP investments include:

  • Green Oil
  • Forestry
  • Sustainable Agro Energy
  • Global Cure Environmental Investment
  • Store Pods
  • Parking Investment
  • Harlequin Property Investment
  • The Resort Group
  • Australian Farmland
  • Carbon Credits

Before you can put your money into such investments, you must prove that you’re a high-net-worth investor. However, the problem is that in the years leading up to your retirement age, you can self-certify that you are, in fact, high-worth. Alternatively, you can get a financial advisor to do it for you. Therefore, it’s pervasive in the UK to encounter a mis-sold pension.

2. Small Self-Administered Scheme (SSAS)

A Small Self-Administered Scheme (SSAS) is a type of pension scheme in the UK that business owners set up when they require more control over how their pension is being invested. Similar to a Self-Invested Personal Pension (SIPP), you don’t have to interact with a financial institution to set up this pension. Plus, it is a high-risk and underperforming investment that usually yields inadequate results

3. Final Salary Pension Transfer

Individuals’ employers usually handle a Final Salary Pension Transfer. In this procedure, you leave behind a Defined Benefit Final Salary Pension Scheme and give up your guaranteed benefits. Instead, you opt for an agreed cash lump sum. Your final salary is considered for this purpose (your wage at the time of retirement) to provide the lump sum. However, due to this scheme’s volatile nature, professional advisers refrain employees from transferring out this type of pension scheme to any other pension provider.

Nevertheless, Final Salary Pension Transfer is quite popular among UK citizens since it provides a guaranteed income that increases with an employee’s rising salary.

4. Occupational Pension Scheme (OPS)

Unregulated entities carry out an Occupational Pension Scheme (OPS) to skip the regulated financial advice procedures. For example, SSAS (Small Self-Administered Scheme) is a type of OPS where the employee doesn’t have to seek any help from a financial institution before taking out the pension scheme.

OPS usually references an account set up by the organization to help employees save for their retirement plans. In most cases, this type of pension scheme falls under three distinct categories:

  • Cash balance plans
  • Defined benefit pension schemes
  • Defined contribution pension schemes

Moreover, while the employer contributes toward each employee’s pension, the employer also deducts the same amount from the employee’s monthly wages. Therefore, there can be some possibilities where the OPS is mis-sold.

5. Qualifying Recognised Overseas Pension Scheme (QROPS)

Lastly, the Qualifying Recognised Overseas Pension Scheme (QROPS) specifically abides by certain Her Majesty’s Revenue and Customs (HMRC) requirements. This scheme is especially beneficial to those who plan to relocate abroad after their retirement. However, it’s also worth mentioning that several individuals encounter mis-sold QROPS when they don’t ensure to have enough information about what scheme they’re getting into.


Q4: How Do I Know If I’m Eligible for Compensation?

There are various ways for an individual to have been mis-sold a pension. If you’re wondering whether you’re eligible to file a compensation claim, here are a few common instances that are a positive indication in this case:

  • Your advisor never asked you if you had any other insurance to cover the loan.
  • No one informed you how the commission works on the SIPP, SSAS, or QROPS.
  • There was no discussion about the apparent or non-apparent terms and conditions while taking out a new pension scheme.
  • Your advisor told you that SIPP is not a choice but an obligation and that you have to take it out.
  • You were told there was no other way for you to buy SIPP or SSAS from another company.
  • No one told you about exclusions to the policy.
  • Your financial advisors explicitly persuaded you to transfer your pension into SIPP or SSAS, or investing in Carbon Credits, Property Syndicates, and any other risky sector.
  • No one offered you any other available alternatives so that you could have obtained the best possible deal.
  • Your financial advisors did not consider your thoughts about the associated risks with the pension deal nor give them priority.

Q5: What Should I Do If I’ve Been a Victim of Mis-Selling?

A recent study conducted by the Financial Conduct Authority (FCA) indicated that one in eight individuals nearing their retirement has an adviser mis-sell a pension product at some point. Nevertheless, it’s best to remember that you don’t necessarily have to lose money from your pension pot to call it what it is—a mis-sold pension—or to claim back compensation.

Therefore, if you suspect yourself to be a victim of pension mis-selling, either through a SIPP, SSAS, final salary pension transfer, or QROPs, you can get in touch with a claim management company or a lawyer as soon as possible to get the maximum amount you deserve.


While this article refers mainly to retirement planning in the UK, people in every country should exercise caution in their financial affairs, especially as they approach retirement. So stay as well-informed as possible and consult an attorney if anyone tries to convince you to do anything seemingly risky with your money.