Personal Pension  

Age Partnership warns of pension permissions blockage

Age Partnership warns of pension permissions blockage

Retirement income specialist Age Partnership has warned of the growing prevalence of rejected pension transactions, as advisers may not have the appropriate permissions in place to help all the customers instructing them.

Age Partnership said its adviser service reveals a growing trend in the number of approaches from clients on the back of failed transactions via IFAs who did not have the appropriate permissions in place.

At the same time, the number of direct referrals from advisers who are aware of their limited capacity or lack-of permissions is also increasing.

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Age Partnership added the March 2015 consultation on defined benefit to defined contribution transfers and conversions or transfers of safeguarded benefits to flexible benefits which followed on from the pension reforms announced in the Budget last year, proposed new protective measures for members choosing to transfer their benefits.

The changes were confirmed in finalised guidance issued in June 2015.

From 6 April 2015, scheme members with safeguarded pension benefits of £30,000 or more in their scheme, wishing to transfer these benefits to access their benefits flexibly, must first get advice from an authorised adviser.

Age Partnership said in order to advise on all defined benefit pension schemes and some defined contribution pension schemes advisers must be appropriately qualified and experienced, as well as holding the necessary pension transfer permissions with the Financial Conduct Authority.

However, the firm sees many cases where advisers remain unaware they need these permissions.

In turn this may be putting some customers at risk of unexpected delays after the provider rejects their transfer.

If a client is given advice by an adviser without the correct permissions, the ceding scheme should stop the transaction, causing serious delays for the client, as well as lost business for the adviser.

Age Partnership added that this was a growing problem with more customers with defined benefit pensions currently seeking the same type of freedoms offered to their defined contribution counterparts.

The firm said that added to this was the issue that the growing prevalence of IFAs being approached by clients with cases that don’t meet their minimum case threshold.

Age Partnership said it is seeing an increase in referrals from advisers relating to all different pot sizes and types of pension scheme (not just defined benefit or defined contribution) looking to outsource because it is not high enough value for them – or simply because they are too busy to meet the demand.

Howard Hill, pension income expert at Age Partnership, said: “The pensions industry has seen a step change over the last 12 months with the introduction of the pension freedoms, but there are still a few crinkles to be ironed out in terms of the implementation.

“Advisers have been adjusting to the changes quickly and professionally, but there is still a knowledge gap about the subtleties of advising on DB to DC transfers and conversions.

“Some advisers simply don’t realise that they need FCA pension transfer permissions – which they may not have – to take on all clients.