Pension transfer advice comes under scrutiny
Pension advice is coming under scrutiny like never before. In reality, there is no such thing as ‘free’ professional pension advice and a professional advisor won’t cold call and won’t offer their services for nothing. In other words, there ain’t no such thing as a free lunch!
The Financial Conduct Authority’s website offers consumers advice on avoiding scams and publishes a list of unauthorised firms and individuals it has received complaints about. As the pensions world has become increasingly complicated it is not surprising that consumers are struggling to understand how best to manage their pension pot. And yet, numerous polls have shown that the majority of people don’t seek advice about their retirement funds.
Yet, surveys consistently point out that people who do ask for professional advice can be several thousand pounds better off. It seems that people think paying for advice is too expensive or, they are not aware of bodies like The Pension Advisory Service – although we understand take up of Pensionwise guidance is increasing.
Sadly, this can mean that savers get the wrong advice – whether that’s done by accident or design. The Pensions Ombudsman says it has received over a hundred complaints from British Steel Pension Scheme (BSPS) members and it is alleged that thousands didn’t receive all the information necessary that would have allowed them to make an informed decision. The Work & Pensions select committee intends to question financial advisors on what advice was given to steelworkers in a hearing on 13th December.
In a statement, the committee said it had “received evidence of questionable approaches and unsuitable advice being given to members of the BSPS, which the chair has described as a ‘honeypot for scammers’, and there are fears of BSPS members nearing retirement losing huge amounts of their life savings”.
But, in a move that demonstrates the sector has good guys as well as bad, a pro bono guidance scheme has been set up to help those affected by the collapse of the BSPS. It will offer assistance to members considering whether or not to transfer out of their DB pensions. The deadline for members to send their completed option form has also been extended, to allow for new advice to be given and considered.
Let’s hope that the rationalisation of the government’s pensions advisory services, if it proceeds, is supported by the appropriate resources and publicity to encourage further take-up. It’s also important that regulators continue to focus on tackling the “bad guys” and allowing the good ones to thrive and do what is a vital job.