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Advisers lose both ways on means-testing

The DWP’s chief economist last week used a Social Market Foundation event to warn financial advisers that they would not be doing their job properly if they advised someone to rely on means-tested pension benefits.

He said it would be “extremely irresponsible” for anyone to recommend clients to rely on means-testing when such benefits are only a safety net and can be taken away at any time.

The statement is an obvious retort to the growing concern in the industry that there will be a significant number of people for whom personal accounts will not be suitable because a big chunk of contributions will be wiped out by means-testing.

So advisers are damned if they do and damned if they don’t. They are apparently “extremely irresponsible” if they advise clients it may not be worth saving into personal accounts, yet could also face misselling claims if they do advise individuals into the scheme and parts of their contributions are wiped out.

Once again, the argument comes down to a fundamental flaw in the design of personal accounts and its ambiguous relationship with advice.

Money Marketing is interested to hear Tory pension spokesman Nigel Waterson’s belief that consensus is “coming apart at the seams” due to such issues and hopes that further pressure, both from the industry and within Westminster will finally press the Government into a rethink.


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Sierra Leone cover image - thumbnail

White paper — Sierra Leone International Insights

Jelf Employee Benefits assesses the areas that employers should be aware of when considering operating in Sierra Leone, including healthcare access, delivery and insurance provisions. This report draws on various sources to highlight specific considerations for this emerging jewel in West Africa.


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