There have been some scandals recently about people losing their pension fund because they were persuaded to invest in ‘off plan’ foreign property schemes.
The Financial Conduct Authority (FCA) has now issued an ‘alert’ about transferring your pension fund to a self-invested pension plan (SIPP), saying make sure the underlying investments are suitable. They already had concerns that some firms advising people about pension transfers were not properly assessing the advantages and disadvantages of the underlying investments held within the new pension arrangement.
The FCA has now said that it is worried about investing pension monies in unregulated products, through SIPPs. In its investigations, the FCA found that there were cases where people with traditional pension plans or final salary schemes were persuaded to transfer them to SIPPs and invest them in ‘non-mainstream propositions’. These new arrangements were typically unregulated, high risk and highly illiquid investments. Some examples of these investments are overseas property developments, self-storage pods and forestry.
It went on to indicate that such transfers or switches are unlikely to be suitable for the vast majority of retail customers.
This seems to be on the increase. Please make sure that you do take care and get independent advice before making any transfer of your pension funds or entitlements.