Your IndustryApr 7 2017

Lisas and pension transfers: the week in news

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Lisas and pension transfers: the week in news

Another tax year has been and gone, with advisers across the country inundated with work.

It is time for the week in news.

1) Why, why, why, a Lisa?

After much anticipation the Lifetime Isa has been launched, just in time for advisers to ignore it and put their clients’ assets into something else.

The Lisa market can hardly be described as vibrant, with just a few companies even bothering to offer one this week.

But this week Hargreaves Lansdown, The Share Centre, Nutmeg and AJ Bell confirmed they would use the same charging structures as those used for their traditional stocks and shares Isas.

Of these four, Hargreaves Lansdown, Nutmeg and The Share Centre offer their Lifetime Isa already but AJ Bell’s will not be available until later this month and Skipton Building Society will launch a cash-only version in June.

2) Many happy returns on your investment

Where has the time gone? Not much has happened really since then chancellor George Osborne introduced pension freedoms two years ago this week.

So radical were the changes that the industry is still divided over the implications (or doesn’t know what it is doing about them).

The policy, which went live on 5 April 2015, essentially scrapped compulsory annuitisation, freeing up over-55s to spend their pension savings exactly as they wished.

But since then some people have done better than others, it turns out.

Research by AJ Bell found thousands of people had been overtaxed on their pension withdrawals and are failing to claim the tax back.

Oh well, you win some, you lose some.

3) Déjà vu all over again

It wouldn’t be an edition of the week in news without a reference to pension transfers.

This week the Financial Conduct Authority and the Financial Ombudsman Service warned advisers they must find out whether pension schemes offer partial transfers when advising on defined benefit transfers.

Failing to do so could give the client grounds for a successful complaint, the ombudsman warned. 

Meanwhile the FCA revealed there are currently 54 advice firms voluntarily restricted from carrying out pension transfers.

This includes 16 of these restrictions which were imposed in 2016.

4) It’s gonna blow!

Questions have been raised about equity release standards as the industry faces what has been dubbed an interest-only “time bomb”.

There are predicted to be around 40,000 interest-only mortgages reaching maturity each year between 2017 and 2032, with 10,000 of these estimated to have either a shortfall or no way of paying the mortgage off.

Dean Mirfin, technical director at Key Retirement, has warned that helping all these consumers may mean having to loosen the standards imposed by the Equity Release Council.

damian.fantato@ft.com