Adviser Rant: Simple approach to avoiding scandal

Rab Shields

I had an interesting conversation over a beer with a friend who I regard as very knowledgeable about financial affairs as he has worked in a bank since he left school.

He told me he is considering liberating his final salary pension to access a larger tax free cash sum than he could get if he remained in the scheme. He had received a glossy brochure in the post followed by a telephone call from a very professional adviser who “knew his stuff”.

He actually thought the phrase “pension liberation” gave credibility to the scheme. Once I explained how these scams take advantage of unsuspecting victims he was a little embarrassed.

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It seems to be one scandal after another with pensions.

We have had pension opt outs from gold-plated final salary schemes that paid huge commissions to advisers, the Equitable Life broken promises, and so on.

Because pensions are a complicated subject with complex regulations, does this make it easier for fraudsters who have the knowledge to circumvent these rules and make large sums of money at the poor investors’ expense?

We have tried pensions simplification once, but is it time to do it properly, make it a subject that everyone can understand then there will be no opportunity for the silver tongued salesman weaving his intricate sales pitch? Discuss.

Rab Shields is an IFA at Simple Solution Wealth Management