A financial adviser has created a guide to assist financial planners which are dealing with pension transfers from the British Steel Pension Scheme (BSPS).
Eugen Neagu, head of financial planning at Montfort, has published a 30-page guide which explores the complexities of the scheme and the available options to advisers consulting steelworkers, while also takes into account a list of important warning and factors, the firm said.
Steelworkers have until 22 December to decide whether to move their defined benefit (DB) pension pots to a new plan being created, BSPS II, or stay in the current fund, which will be moved to the Pension Protection Fund (PPF).
The failed scheme has about 130,000 members of which 43,000 are deferred, which means transferring out of their pension is an option for them.
FTAdviser reported in November that several steelworkers appeared to be transferring out their pensions after being lured by cheap deals by unregulated introducer firm Celtic Wealth Management & Financial Planning, which then referred the clients to advice firm Active Wealth.
Mr Neagu was one of the financial advisers involved in CHIVE, a series of free guidance sessions for steelworkers in Port Talbot set up by financial advisers.
After speaking to several steelworkers, Mr Neagu believes that “a huge number of deferred BSPS members requiring pension transfer advice have not yet received the appropriate and necessary advice they are entitled to”, Montfort said.
Instead, ‘commoditised’ pension transfer advice - which has not taken into account the personal circumstances of the members - has been received, the firm added.
Mr Neagu said: “My direct contact with BSPS members has granted not only an informed understanding of the available BSPS options and extreme wrongdoings by a number of advisors, but also the member’s afflicted emotional and psychological turmoil.”
He argued that financial advisers need to “operate as a community and network,” which is the reason why Montfort decided to publish this guide.
He said: “This practice allows us to collectively transform from a stigmatised industry perceived to continually seek the next transaction and into an expert advisory profession.”
According to Alan Chan, director and chartered financial planner at London-based IFS Wealth & Pensions, the guide “covers the key areas an adviser should consider when advising in this complex area, and it appears that Eugen [Neagu] is well qualified and experienced to do so”.
Mr Chan believes that as highly qualified professionals, advisers “have a duty to share best practices within our profession”.
He said: “Naturally, no one is perfect and no one is going to have the perfect guide for all aspects of financial advice.
“This is why it takes the whole profession to come together via the professional bodies, such as the Personal Finance Society, to provide members with good practice guides [which they already do]. These guides have been issued more frequently this year and I hope it continues.”
Gem Durham, independent financial adviser at Obsidian, said that a lot of work has gone into the guide.
Ms Durham argued, however, that most professionals should already be aware of the necessary work behind a DB transfer.
She said: “Frankly, if someone needs the information contained within this report, then they should not be advising in this area.”
The Financial Conduct Authority declined to comment on the appropriateness of the guide.
maria.espadinha@ft.com
