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Bee puts forward pension deal to stop misbuying risk

A pension product allowing low earners to unravel their retirement saving if they are at risk of losing out under means-testing on retirement would remove the risk of misbuying, says Scottish Life pensions guru Steve Bee.

Bee says the pension industry should accept that the Government will not back down on the Pension Credit and means-testing in this round of consultation and the industry should fight for changes to the rules that have some chance of succeeding.

Bee&#39s proposal would see that those affected by means-testing at retirement – seen by many pension experts as a disincentive to save in pensions – guaranteed the freedom to undo their pension saving by withdrawing the benefits less tax relief.

His solution follows comments made by outgoing FSA chairman and chief executive Howard Davies last month that he did not know whether it is possible to design an unmissellable pension.

But Bee says his plan would remove the misbuying risk that faces products sold under Sandler light-touch regulation as well as misselling of products sold with full advice.

Bee says: “We have to realise that Pension Credit is politically immovable so we have to ask what can be changed that is practical and achievable.

“If pensions could be undone at retirement, then the product that was distributed at least will not have done any harm.”

Intelligent Pensions technical manager David Trenner says: “This proposal is wholly sensible as it will encourage people on low incomes to save. In fact, it is so sensible you can be certain no one in Government will allow it.”

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