Concerns over 16% commission pension transfer scheme
Advisers have urged caution over a scheme advertising 16 per cent commission rates on pension transfers for people aged 55 and under.
Pension Solutions, which acts as an introducer to a panel of IFAs, claims on its website a man with a £60,000 pension pot can “earn” £9,000 in commission by shifting his fund into a new pension plan. (Website has been taken down following the publication of this article.)
The firm says a fixed one-off fee of £3,750 is charged before the 16 per cent commission is paid to the customer.
The company says the commission does not come out of the client’s pension fund.
The Pension Solutions website also claims projected growth on the scheme’s investments is 9.2 per cent a year.
Pension Solutions managing director Danny Coughlan declined to comment on the new fund or give details of the IFAs on its panel.
Informed Choice managing director Martin Bamford says: “This is a terrible deal for the customer and could be in breach of HMRC rules on pension commencement lump sums. The commission paid to the customer could be considered an unauthorised payment and the pension fund could suffer significant tax penalties as a result.”
Hargreaves Lansdown head of advice Danny Cox says: “This is absolutely horrendous and any IFA using this firm to generate leads should be ashamed of themselves.
“The approach is misleading and wrong on so many levels. How can an adviser justify paying 16 per cent commission? It is outrageous that this firm can bypass FSA rules on advertising and use over-egged growth rates to lure people in.”
An FSA spokesman says: “Anyone considering taking money from their pension by unlocking some of their retirement pot early should treat any schemes that offer the chance to do so with extreme caution.
“Anyone who accesses money from their pension, either via a loan or other ways outside of the normal allowed methods, runs the risk of having to pay unauthorised payment charges.”