Even with the best-run pension schemes, providers can make mistakes or take too long to correct them. If something goes wrong – leaving you worse off – you might be entitled to compensation. If you’ve lost out financially, you might be awarded compensation that aims to put you back in the position you would have been in had the problem not happened. This might be paid to your pension or directly to you.
Compensation if your pension or pension investment provider has failed
If your money is with a UK regulated pension or annuity provider or it is in investments in a pension that are managed by UK-regulated firms and they fail, you may be entitled to compensation from the Financial Services Compensation Scheme (FSCS).
The FSCS was set up by parliament to provide a completely independent and free service that can protect you when things go wrong with financial firms where you hold money.
The FSCS operates different levels of compensation according to the type of investment involved. There are limits to how much they can pay.
The FSCS don't cover most defined contribution trust-based workplace pensions. If you’re contributing to or have contributed to one of these schemes and are concerned about the security of your pot, contact the employer or the trustees.
Find out more from the section ‘pensions regulated by the Pensions Regulator’ in our guide How safe is your pension?
The FSCS also doesn’t protect defined benefit pensions. These are likely to be protected by the Pension Protection Fund.
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Compensation if you’ve received bad advice regarding a pension
If you’ve lost money because you have received advice about a pension from a UK regulated financial adviser you may be entitled to compensation.
If the adviser who gave you the advice is still trading, you will need to contact them first to complain. If you are not satisfied with the outcome, you can complain to the Financial Ombudsman Service
If you've transferred out of a defined benefit pension and want to make a complaint about the advice you've received, you can find out more about what to do and who to contact in our guide Dealing with pension problems and making a complaint
Compensation if something has gone wrong with the management or administration of your pension
In these situations, it’s always best to contact your pension provider first. Talk to them about what’s happened and give them a chance to put things right.
It's always best to put your complaint in writing to your provider, and make a note of who you spoke to and on what dates. This is so you have a record of what you’ve asked them to address.
If you're unhappy with their reply, you can escalate your complaint through your scheme’s Internal Dispute Resolution Process. Your scheme provider should give you all the information you need to do this.
If you’re unable to resolve the problem in this way, your next step is to contact The Pensions Ombudsman
The Pensions Ombudsman is an independent organisation set up by law to investigate complaints or disputes about pension schemes. They are completely independent and impartial. They look at the facts without taking sides and their service is free.
The Pensions Ombudsman deals with complaints and disputes about the administration and/or management of occupational and personal pension schemes.
They can look at things like:
- taking too long to do something without good reason
- failing to do something they should have done
- not following the rules of the pension scheme or the law
- breaking a promise
- giving incorrect or misleading information
- not making a decision in the right way.
If the ombudsman decides your complaint should be upheld (agreed with) or partly upheld they will usually tell the party at fault to put things right. That might include making good a financial loss or taking other steps to correct the problem. You might also receive compensation for any distress or inconvenience caused.
