With just over five weeks to go until the new pension reforms come in, it’s little surprise that pensions continue to dominate the news.
1. What retrospective regulation?
Understandably, advisers are worried about future redress claims due to the pension reforms set to come in, especially on transfers from lucrative final salary arrangements.
With the new reforms, anyone who wishes to transfer from a DB to a DC pension will be forced to take advice, except if the pot is below £30,000.
Demand for transfer requests is anticipated to increase significantly and the Financial Conduct Authority’s policy is to assume such transfers will most likely not be in the client’s interest.
It would appear however that advisers simply do not want to take on this responsibility as they are frightened that they will be held responsible if clients go against their advice.
At FTAdviser’s pension freedoms event, held in Birmingham, Chris Daems of Principal Financial Solutions said in most cases his firm would simply turn away such business due to the risks involved.
At the same event, the FCA’s Maggie Craig said advisers should decide on a “case-by-case basis” whether or not to turn away clients insisting on a course of action that defies a recommendation given in relation to their pension post-April.
At FTAdviser’s sister conference in London, pensions minister Steve Webb told delegates to ask David Geale, who was appearing in a later session, how they can cover themselves against this, adding that they should record whatever Mr Geale says.
When Mr Geale was asked this, he said the regulator has struggled to find any instances of it retrospective regulation occurring. Mr Geale said if advisers have done their job properly and the customer has understood the risks, then that is what they will be judged on at any time in the future, with the at-retirement reforms not changing that point.
It is fair to say from the comments below the article that the FCA is alone in thinking this.
2. More post-April propositions unveiled.
This week Metlife and Alliance Trust Savings joined other providers by unveiling their post-April pension propositions, including what it will cost consumers. ATS is scrapping all set up charges on drawdown, previously up to £250, and introduced an annual flat fee for all types of drawdown.
The annual fee of £276 will be charged for all customers in drawdown from January 2016, while there will be no fee for being in drawdown from the 6 April to January 2016. Metlife told FTAdviser that there will be no fee to use any of the new pension flexibilities.
Alliance confirmed that from January 2016 the annual drawdown fee will be £276 and from April there will be no fee for being in drawdown. Previously, if a customer was in drawdown a charge for their general Sipp administration was charged separately.
Just Retirement also launched a set of products, aimed at giving customers a guaranteed income for life and a flexible fund which can be accessed from time to time. It is not known what this will cost consumers.