Personal Pension  

State Pension surprise and PPI provision shame: 5 key themes

State Pension surprise and PPI provision shame: 5 key themes

This week saw PPI pain for the banks, complaints over the new State Pension and official calls for action on the compensation scheme levy.

Those three issues and a couple more will now be rounded up for your reading pleasure:

1. State Pension headache for minister.

Article continues after advert

On Wednesday, the Work and Pensions Committee launched an inquiry into the new State Pension, following concerns that many of those who will be affected do not know enough about the changes.

Committee chairman Frank Field accused the government of moving the goalposts in retirement savings without providing enough information about the “complex changes”, adding that “some people may face a shock when they come to claim their pension”.

Earlier in the week, Hymans Robertson analysis suggested that the majority are set to receive a nasty surprise under the new system.

Sue Waites, a partner at the firm, commented: “Under the current regime, although basic state pension accrual is limited to 30 years, additional State Pension can be accrued over an entire working life (potentially up to 50 years), under the new system it will be capped at 35 years with no additional State Pension so there will be less scope to build up a more generous entitlement.”

The pensions minister Ros Altmann reacted to the research by branding it “irresponsible scaremongering”, although she later apologised for the remarks. This didn’t stop the shadow pensions minister Nick Thomas Symonds from scoring political points and calling on the government to come clean about those who stand to lose from the single-tier pension.

2. Third quarter reports of shame.

This week saw several of the UK’s biggest banks report their third quarter results, with all being forced to admit significant provisions made to cover the cost of PPI payouts or other regulatory fines.

Lloyds increased its PPI provisions by a further £500 million in the third quarter, bringing the total amount provided to £13.9bn, while Barclays made more than £1bn of additional provisions - up from £500m in 2014 - this year in relation to ongoing investigations, including issues with foreign exchange trading.

Santander revealed that it set aside £43m to cover redress for investment advice claims following last year’s fine from the Financial Conduct Authority, with only RBS seeing litigation and conduct costs falling year-on-year to £129m from £780m; although the bank saw profits hit by a high restructuring bill.

3. Committee calls for FSCS levy action.

Quote of the week goes to the Treasury Select Committee’s chairman Andrew Tyrie during his grilling of FCA practitioner panel members about regulatory and compensation scheme costs: “We hear the moaning and we can be sympathetic, but what we need is to hear some answers”.

The practitioner panel’s chair and UK HSBC boss Antonio Simoes told MPs that the Financial Services Compensation Scheme levy “disproportionately impacts smaller firms”, adding that more predictability “would be desirable”.