Pensions – one of those things that can be quite headache inducing for people to consider. Years ago you started a job, paid a bit from your salary each month, and you could just forget about it. When I started my first job, working for the NHS, I paid out money towards my pension and my student loan every month, and that was that.

It might have seemed more simple but what it meant for so many people was that the money they had spent years building up was essentially stuck, with millions of people unable to access that. That’s the point of a pension you might say? But this meant that people had no freedom or control as they approached retirement age.

Changes to pension laws

New pension laws were introduced in 2015. So what changed exactly? For those 55 or over, instead of using the fund to buy an annuity product that pays you an annual income for life, you were instead allowed to take the whole fund to do with as you wish – a radical change to previous pension laws.

In this case you got the first 25% tax free, with the remainder being taxed at the normal rates. These changes were regarded as giving people more autonomy over their pensions and when and how they used the money they had accumulated.

WINNERS AND LOSERS

Like with any change in law there were winners and losers here.

The changes allowed people with a final salary pension to move their preserved pension schemes into something called a Defined Contribution (DC) personal pension arrangement. This meant that if they wanted they could access the whole pot of money from age 55.

Great you might say? Not always, no.

One of the consequences of this is that when you transfer your Final Salary pension, you give up a number of guaranteed benefits that you cannot get back, such as the guaranteed income that your scheme was due to pay you for the rest of your life. This isn’t always the best idea. But financial advisers have taken advantage and charged people to make the transfer anyway.

What can you do?

If you think you got bad advice on freedom pensions, one of the things you can do is check out Money and Me Claims’ check list. They have helped lots of people claim back some of the money they have lost through bad advice in this area. Check out their case studies for examples.

My dad used to stay that money took too long to earn and save to waste it. He was right. Don’t let things like this go without challenging them.