Personal Pension  

Government in talks with regulators on pension access

Government in talks with regulators on pension access

Those providers not offering pension scheme members full access to the new freedoms could be named and shamed as the government steps up its rhetoric over those “dragging their feet”, with talks underway with regulators and a full inquiry anticipated.

Writing in the Telegraph over the weekend, the secretary of state for work and pensions Iain Duncan Smith stated that some savers have been effectively “handcuffed”, pointing out to insurers that “it is their money that you hold, not yours”.

Mr Duncan Smith’s intervention is significant and shows an escalation in the priority accorded to the issue within government.

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In an interview with FTAdviser sister title Financial Adviser last week, former pension minister and Liberal Democrat MP Steve Webb said Mr Duncan Smith, with whom he said he “got on well”, displayed a general “lack of interest in pension policy”.

The secretary of state’s message follows several firms admitting they are unable to offer all scheme members access to their money upon reaching age 55 in the various ways now enabled under the reforms that came into force in April.

Most recently, Friends Life was forced to write to 1,300 customers who had requested partial pension withdrawals, telling them that the flexi-access drawdown option was no longer going to be offered due to the complexity of their pension back book.

Mr Duncan Smith expressed concern that “some firms still appear to be dragging their feet”, adding that it is their responsibilty to sort this situation out and look after customers.

“I know that some companies have seen practical difficulties, with old IT systems meaning that staff have to process requests clerically. That is why allowing firms some flexibility over how they bring in the changes was necessary.”

He said that over the coming weeks, the new pensions minister Ros Altmann and economic secretary Harriett Baldwin will be talking to the relevant regulators and the industry to see how people can be guaranteed the flexibility they deserve.

“We will not hesitate to take action to ensure that consumers get a good deal, and if we have to we are prepared to name and shame those companies who are putting barriers in the way of people getting access to their money.

“It is your pension, and it should be in your hands. I am determined that those who have saved should not remain handcuffed.”

The Telegraph, which has launched a campaign on pension freedoms being restricted, also said in a front page lead on Saturday that 3m people with company pensions are unable to access ad hoc lump sums promised under the rules and 2m “cannot cash in their funds at all”.

It also said research had shown up to 1m people sold private pensions in the 70s, 80s and 90s face fees of £1,000 for advice to access their money, adding that companies including Aviva, Aegon, Royal London, Prudential and Zurich require savers to get advice for flexi-access drawdown.,