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Can I claim compensation if I’ve lost my railway pension?

A railway pension – a pension held with the Railways Pension Scheme (RPS) – is one of the most attractive around, giving you a guaranteed income for life or a death benefit to your beneficiaries if you die before claiming your pension.

Another factor that makes the RPS so lucrative is that employers put in at least 60% of – and normally 1.5 times – your contribution.

However, after the introduction of then-Chancellor George Osborne’s pension freedoms reforms in 2015, many people chose to transfer out of their railway pensions.

If you received unsuitable financial advice to do so, you could be entitled to compensation.

Why was transferring out of a railway pension a bad idea?

Transferring out of a risk-free, defined benefit (DB) pension into a defined contribution (DC) scheme like a self-invested personal pension (SIPP) or another pension product is generally a bad idea. Depending on the terms and conditions of your old and new pension, you could leave yourself much worse off and lose things like death benefits and other features.

Many pension transfers out of railway pensions and other high-value and benefit-rich schemes since 2015 came about because financial advisers only got paid if a transfer went ahead. As such, if you’ve transferred out of a railway pension, your financial adviser was potentially incentivised for you to do so, regardless of whether it was the right decision in your situation.

It’s clear to see the conflict of interest here!

Ultimately, you should only have been advised to consider transferring out of a final salary pension if:

  • You are in significant and immediate debt.
  • You have a significantly shortened life expectancy.

If neither of these applied, you likely received unsuitable financial advice, and your transfer out of your railway pension was mis-sold.

Learn more about mis-sold pensions.

Which financial advisers have been involved in railway pension transfers?

Unsuitable pension transfer advice was given to RPS members from various independent financial advisers, including agents from some instantly recognisable, well-known, and trusted brand names.

However, unsuitable advice is unsuitable advice, irrespective of where it came from.

But just because your financial adviser was associated with a blue-chip brand you’ve used for years, that doesn’t mean they couldn’t have got this one wrong.

What is the basis for a mis-sold railway pension transfer claim?

The most significant consideration in any pension transfer or pension mis-selling claim is the extent to which your transfer or investment has left you worse off.

So, for example, if you transferred an RPS pension worth £60,000 to a SIPP, and your SIPP was later found to have no value, you would usually claim for the £60,000 lost plus the growth you’d have seen had you not transferred.

Pension calculations and claims are complex, so it isn’t quite as simple as that, but it gives you a useful idea of what you’d be looking at.

You don’t need to have lost money to bring a claim

While financial loss is the primary consideration in any financial mis-selling claim, you might be able to claim compensation for unsuitable advice even if you didn’t lose money.

The point is that the advice you received wasn’t appropriate or suitable in your circumstances, so the pension transfer or new pension product was still mis-sold.

What if my financial adviser is no longer in business?

If the financial adviser that advised you to transfer out of your RPS pension is no longer trading, you can still take your claim to the Financial Services Compensation Scheme (FSCS).

Depending on when you received advice and when the transfer took place, you may be able to claim up to £85,000 in compensation.

While this may not recover all your losses, it is still a significant sum that could help put your retirement plans back on track.

How to bring an RPS transfer mis-selling claim

You don’t have to use a law firm to bring a pension mis-selling claim and can conduct the entire process yourself if you wish.

Alternatively, if you feel like you need support in bringing your claim, LawPlus Solicitors can help you every step of the way.

Contact us now for a free, no-obligation review of your pension transfer advice or product. A member of our friendly team of pension mis-selling experts will be in touch soon to tell you if we believe you’re entitled to compensation.


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