PensionsJun 28 2019

Pension problems and more Woodford woes: the week in news

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Pension problems and more Woodford woes: the week in news

As tensions rise in the race to No 10, police are called to Boris Johnson’s house and the threat of a no deal Brexit reared its head once more, the news has been dominated by the Tory leadership contest.

Closer to home, the Woodford saga continued and pensions headlines made a splash. It’s time for the week in news.

1 Government's case extinguished

In a landmark pensions discrimination case, the Supreme Court ordered that the government’s changes to judges and firefighters pension schemes were discriminatory.

The Fire Brigades Union has been battling the changes since both judges and firefighters defined benefit schemes were closed in 2015. In December, the Court of Appeal said the government had discriminated against the two groups.

According to the union, the Supreme Court ruling was the last legal hurdle in the dispute — leaving the government with no further avenue to exhaust — and FBU said it felt “vindicated”.

Over the years, the FBU had initiated more than 6,000 Employment Tribunal claims alleging the changes had amounted to unlawful discrimination.

2 Paperwork problems

Problems with Aviva’s policy documents left an adviser frustrated that his client could be handed a 40 per cent tax charge, FTAdviser revealed.

Philip Wise, chartered financial planner at Informed Choice, filed a complaint with the insurance giant after his client was unable to access death benefits as drawdown despite the provider's key features document for stakeholder pensions stating this was a viable option.

The client, who could now face an £100,000 tax bill on the £250,000 pension her husband had left with Aviva, wanted to take a drawdown option to avoid the inheritance tax levy.

Aviva appeared to initially uphold the complaint, admitting they had not provided the correct description, but have since backtracked and told Mr Wise to take his complaint to the Financial Ombudsman Service.

3 A (fourth) week of Woodford woes

This week did not improve for the once revered fund manager Neil Woodford as he was criticised by both the Financial Conduct Authority boss and the Bank of England governor.

Mr Woodford has had a tumultuous month since he had to suspend his stricken Equity Income Fund on June 3 following outflows in May of £9m a day.

He has since been selling assets to raise cash for the fund and this week sold shares in two illiquid companies to raise £100m — above the value at which the funds were held in the fund, meaning he was able to sell the stakes for higher than he expected.

That was little relief for Mr Woodford however as FCA boss Andrew Bailey blasted what he called a "conflict of interest" at the heart of Neil Woodford’s suspended Equity Income fund.