View more on these topics

Govt vows to name and shame over pension freedom failures

UK-Parliament-Big-Ben-Lamp-700x450.jpg

Work and Pensions Secretary Iain Duncan Smith has stepped up the tough talk against providers who are not offering their customers full pensions flexibility.

Writing in The Telegraph this weekend, Duncan Smith says he will “name and shame” providers who are stopping savers from accessing their pension pots.

He says: “Two months into the reforms, we are watching the market closely. I know the pensions industry is working on the design of new and innovative drawdown products and many providers have stepped up to the plate and are already offering their customers flexibility.

“But I am concerned when I hear that some firms still appear to be dragging their feet.

“I have a message for those firms: it is your responsibility to sort this out, and look after your customers. After all, you are holding their money – not your own.”

Duncan Smith that both he and pensions minister Ros Altmann are monitoring the situation, and the Government will be holding talks with regulators and industry over the issue.

He adds: “We will not hesitate to take action to ensure that consumers get a good deal, and if we have to we are prepared to name and shame those companies who are putting barriers in the way of people getting access to their money.”

The comments come after it emerged earlier this month Friends Life could not give customers access to flexi-access drawdown and uncrystallised funds pension lump sums.

Providers are not compelled to offer full pension freedoms. Legacy products and older computer systems mean some firms would need to invest significant sums to be able to offer partial access to pension pots.

Recommended

Friends-Life-FriendsLife-700x450.jpg
2

Advisers say Friends Life pension freedoms failure was ‘inevitable’

The rapid pace of pension reform made Friends Life’s failure to offer customers access to the new freedoms inevitable, say advisers. Last week, Friends Life wrote to 1,300 customers apologising for its inability to facilitate flexi-access draw­down and uncrystallised funds pension lump sums. It said some of its older products had “complex features” that required […]

Friends-Life-FriendsLife-700x450.jpg
7

Friends Life unable to offer pension freedoms

Friends Life is unable to offer its customers access to pension freedoms, either through drawdown or partial withdrawals, after failing to adapt its antiquated systems. The provider has written to 1,300 customers who have requested partial withdrawals apologising for the failure. Savers with the provider who want to take advantage of the freedoms can either […]

Pension wise logo
8

Pension Wise could be extended to cover property

The Government may have to explore expanding the scope of Pension Wise sessions to include property, one of the new guidance service’s delivery partners has hinted. The Pensions Advisory Service head of information and guidance Charlotte Jackson says property is “one of the areas that very early on we need to do some work on”. […]

Business-Handshake-Meeting-Deal-Low-Angular-700x450.jpg
1

Pension freedoms architect joins BlackRock

Chancellor George Osborne’s former chief of staff Rupert Harrison has joined fund manager BlackRock. Harrison, who is credited with driving the Chancellor’s revolutionary pension reforms, will take up the role of chief macro-strategist for funds investing in equities, bonds and cash. He is likely to be paid around £150,000 excluding bonuses, the FT reports. He […]

Directors, limited liability partners and auto-enrolment

By Jim Grant, Senior Product Insight & Technical Support Analyst 6 April 2016 brought in changes to employer duties for directors and partners in limited liability partnerships. Here we explain exactly what’s changed. Before 6 April 2016… Directors of limited liability companies where there were no other directors or employees were exempt from the employer […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 25 comments at the moment, we would love to hear your opinion too.

  1. Everyone please remember this story, when we have to start paying back thousands in “miss selling” claims.

  2. There are contracts out there with no additional charges – Canada life for instance.

  3. Douglas Baillie 15th June 2015 at 9:41 am

    I agree with DH.
    Duncan Smith clearly has absolutely no appreciation or understanding of the technical complexities, or the FCA rules/COBS/MIFID surrounding pension switches and transfers.
    The Claims Management Companies will have a field day that will eventually bankrupt the FSCS.

  4. Andy Robertson-Fox 15th June 2015 at 9:55 am

    On a slightly different tack but should not IDS and Co name and shame their own department, the DWP, for denying the frozen pensioner the freedom to enjoy what they, like all other State Retirement Pensioners, have fully qualified for?

  5. Typical politician foolery. I don’t really understand the issue but I’ll chip in with a catchy soundbite anyway.

    “We will not hesitate to take action to ensure that consumers get a good deal”

    What, by letting them exhaust their pensions and then spend years in poverty you mean?

  6. By imposing the block on at-retirement transfer of protected PCLS, Government is also effectively preventing some from accessing flexibility. Perhaps Government will practice what it preaches by addressing this in the July budget?

  7. John Hutton-Attenborough 15th June 2015 at 10:12 am

    I do believe that it is not possible to transfer out of a public sector pension scheme to enjoy pension freedoms…pot and black I believe!

  8. Douglas Baillie 15th June 2015 at 11:16 am

    All of the above commentators are right. This is an unholy mess of massive proportion that is wildly out of control, and I see nothing from the FCA or the Treasury that gives me any comfort whatsoever that any one person in a position of power who posesses well informed prudential oversight.
    Time for Dr Ros Altman to step forward and wrest control?

  9. The confusion is caused by advisers and providers still thinking in terms of “pension” when in fact it is an investment account for people aged 55+. The advice about income from the investment is exactly the same as advice about income from a unit trust or investment bond. A pension is an investment like any other except there is a different tax regime applying, that’s all. Defined Benefit schemes should have a retirement option to transfer the cash equivalent to a drawdown scheme without requiring an adviser to have the old pension transfer qualifications. There is no need for this qualification for immediate vesting. A new qualification perhaps, but the old G60 is as useless as my PhD when it comes to advising on immediate vesting.

  10. Bid deal. So name & shame. What difference does this numptie ( who was sacked as leader) think this will make? The named will probably be grateful for the free publicity making it clear that they won’t help people to go broke.

    What will happen if ever this daft govt passes a euthinasia bill – will they name & shame doctors who refuse to kill their patients?

  11. It’s always the same though. A few commentators get upset (like myself) and go to print about industry matters, but never the providers themselves. Quite frankly, if they can’t fight their corner, why should we?

    • Because Steve, they don’t have to pay any interim levies !!

      So like the regulator and government they don’t give a sh1t about fighting their corner, because they all know its us who have to foot the bill.
      Also from a provider perspective they must (like us) be so bogged down with regulatory processes paperwork etc etc etc you cant function properly, and who in reality is going to or can invest heavily into sorting out a problem not of their making.

  12. Totally agree with Ken Durkin. I am single and want to transfer out of my DB scheme into a flexible drawdown SIPP, partly because I want to be able to will to my kids, and partly because I want flexibility to dip in and out of work over the next 10 years. The cheapest quote for a letter of transfer so far is £2000.

  13. Douglas Baillie 15th June 2015 at 1:53 pm

    Talking about levies DH: As the FSCS levy is now unsustainable, with more and more liability falling on a dwindling group of compliant IFA diehards, isn’t about time that some of the huge fines levied on the banks were used to prop up the FSCS?

    • Douglas, if you have read the main article this week (re down the plughole) you will get my thoughts !

      When and only when, fines have stopped and all the money gone and there is nothing left for the FSCS claim, and no functional IFA’s left, will the FCA turn round and say; “hey we got an idea lets keep the fine money, and create a policy/fund/product levy we might be able to reduce the cost burden from the IFA’s”

  14. @MartinCooke Until the FCA and FOS agree upon a no liability streamlined process, it will not be cheap to approach a qualified Pension Transfer Specialist who has to spend time on a detailed report and accept the long term business risk for processing the transaction. I would happily not be involved where self certification of the transfer decision is preferable.

  15. @Geoff Sharpe Don’t get me wrong I totally understand why they are reluctant, they need to come up with a way for people like me to declare that we understand all the implications and wish to transfer out of the DB scheme. The early retirement offer I have received would take me until I’m 96 to clear it with zero growth!!! My guess is that the company want people to transfer out as the scheme was closed over 10 years ago and there are probably only a few hundred in it.

    • Martin, I was in the same boat until I heard I could transfer to an Individual Stakeholder plan with Scottish Widows on an execution only basis. Call Scottish Widows Direct sales force.

  16. @Ken Exactly what we need but will never get.

  17. I’m not in the habit of defending insurers, but to use phrases like “failure” or “dragging their feet” doesn’t seem fair. The Government could have obliged all pension providers to make the freedoms accessible, but they didn’t. So, insurers are justified in deciding whether or not to provide the various options and, as with any company, surely this would have to be a commercial decision based on maximising their profits? At the moment, I would say it is the regulatory system that is doing the best job of making it difficult for consumers to utilise the pension freedoms.

    • Totally agree. If the providers are fulfilling the contract they have with the customer then they are not failing them. It is not for the government to decide that providers must become like retail banks and have the system and staffing levels to allow people to take their pension out at a rate of £50 per day.

  18. FCA & FOS are not ever going to exempt you for rubbish advice or poor insistent customer practices- so I think we are barking up the wrong tree and should focus elsewhere….for example on just giving decent advice. We have already dealt with many cases without issue with good solid advice processes supporting it-and saved customers a fortune by doing this the right way- so not sure what we are worrying about. But we will definitely charge to do this properly.

    Product providers have TCF principles to adhere to and they are flying in the face of Principle 6. I don’t think they are using delaying tactics I just think they are incredibly poor at service and administration when it isn’t related to new business- actually even when it relates to new business- so dealing with people who may want to leave them……our conversations with their teams just beggars belief.

    Every provider is taking an age to provide information and then half of it is often missing and instead of problem-solving and helping us find solutions they just tell us ‘that is not the way we do it’- they need to get on and embrace technology advances and start reacting to electronic communications and focusing on customer service- there are lots of ways to do it.. I have 2 Dear CEO letters in currently registering complaints- and not one of them had even responded as per their complaint obligations -maybe they need some lessons in how to recognise a complaint- just as we have to learn

    So government go for it- it is their money and if they want it then poor provider practices shouldn’t be stopping it.

  19. John Finlayson 15th June 2015 at 6:27 pm

    When will the government remind people that if any of the pension pot relates to contracted out benefits that there will be a reduction in their state pension post April 2016 to cover having contracted-out of additional state pension? After April 2016 will be too late when people realise their state pension will have been calculated taking this into account. How many complaints will arise and will the newspapers currently criticising providers be anywhere to be seen? I doubt it.

  20. Julian Stevens 16th June 2015 at 3:47 pm

    It’s all very well for these providers to claim that they can’t modify their systems to accommodate partial withdrawals but let us not forget that they had no trouble at all unilaterally stakeholdering all their old PP contracts back in 2001, thus rendering them overnight virtually valueless to the intermediaries who’d written them in the first place. Breach of contract methinks. But what can you do against giants such as Standard Life, Aviva and so on?

    And now they’re claiming that they can’t modify their PP contracts (or their old Investment Bonds) to accommodate Adviser Charging. They could if they wanted to but they don’t. I don’t trust any of them. (I wrote something considerably stronger originally but decided to replace it.)

  21. This is all crocodile tears.

    A pension is a particular contract originally designed to provide an income at retirement. The encouragement was tax relief on contributions and 25% tax free cash. This is not a bank account. Sure it is a form of investment, but with conditions attached.

    If you didn’t like the conditions you could have always invested in PEPs, ISAs, Insurance Bonds, Funds, Investment Trusts, shares and bonds. These can be accessed at will within their own sets of rules. So why bleat now because you did the wrong thing. Indeed you should have done both.

    That this government has put itself forward as the champion of freedom is a con worthy of legal action. It is nothing other than an attempt (so far very successful) of accelerating the tax take. That some in the industry and the many pension holders are too dim (or greedy) to recognise this is a great pity.

Leave a comment