Rolls Royce raised the alarm with the regulator after it noted a surge in applications for transfers out of its defined benefit scheme – many of which were poorly written, with missing or difficult-to-read accompanying documentation.
It has claimed – and so has the regulator – these are from financial advisers. Not introducers (although some of the policyholders might have been lured in by an introducer), but financial advisers. Regulated, bona fide advisers.
Which begs the question: didn’t they learn anything from British Steel?
People who have lost their jobs at Rolls Royce may well need some money now to tide them over. Many of them may believe their best financial interests lie in taking their DB pension elsewhere and perhaps, if they are eligible and over 55, cashing in on that 25 per cent tax-free lump sum.
The advisers can, doubtless, provide documentation and evidence as to why this is the recommended course of action at this time. If it’s defensible, it’s right, right?
Not necessarily. The question is not whether you can justify it as the right course of action, but whether it is the very best course of action, with no future negative repercussions.
Was there no alternative way of helping clients to balance immediate needs while keeping their guarantees? Or was this just too difficult to bother doing? Perhaps Rolls Royce’s redundant staff were just too attractive a target to pass over.
Why is it the best thing to rob people of jam tomorrow in order to provide jam today? Can every single one of these transfer requests be incontrovertibly proven to be the very best thing for the client, today and tomorrow?
Some advisers have correctly questioned why other advisers are continuing to work in this sector, given the regulatory strictures surrounding DB transfers.
Are we likely to see any future Rolls Royce claims land at the door of the Pensions Ombudsman? You bet.