ALARM BELLS IN THE CITY AS PENSION COMPLAINTS SOAR.
The Personal Investment Authority is worried about a 50 per cent increase in complaints about the sale of pension top-up funds, known as additional voluntary contributions (AVCs).
It is feared that greedy salesmen have been urging members of company pension schemes to pay AVCs into funds outside their occupational scheme, known as free-standing additional voluntary contributions (FSAVCs).
The salesmen would gain commission from a FSAVC, but not an AVC.
Now the PIA is to visit every firm which gives pensions advice in an attempt to discover the scale of the problem.
A PIA spokesman played down the fears, saying: "A lot of evidence is simply anecdotal."
If you are unsure about your FSAVC, talk to the firm that sold it. If you are unhappy with their response, call the PIA Ombudsman on 0171 712 8700.
The pensions industry is still trying to recover from the bad publicity over people wrongly advised to quit their occupational scheme for a private plan. That scandal cost the Prudential alone pounds 1billion to re-stock victims' pension funds.
But industry experts say many people would have been rightly told to take out a FSAVC, rather than an AVC.
Simon Holt, of Skipton Financial Services, said: "Company AVCs often offer a cheap and simple way to save. But that simplicity may mean a restricted choice of investment funds and poor long-term performance.
"On the other hand, the charges on FSAVCs could be higher and there's still no guarantee the funds you choose will be a long-term winner."