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IFAs fail to send out A-Day letters

Advisers who believe pre-A-Day planning starts and ends with the 1.5m pension fund issue are ignoring client needs and face the wrath of the FSA, according to O&M Systems.

The specialist software firm says most IFAs have only a small number of clients affected by the 1.5m limit but other iss- ues that have had less publicity need to be addressed.

For example, the tax-free cash implications for clients with existing section 32, executive pension and deferred occupational plans, where clients may be in the right contract but with the wrong provider, says director Gra- ham Miller.

He says the FSA warned advisers in June that A-Day letters are required to be sent to clients or they could fall foul of TCF rules but few have contacted their clients.

Miller says the main problem is the lack of advisers active in the pension transfer market. The FSA told Miller it does not know how many advisers are authorised to advise on pension transfers but estimates that the majority with the necessary G60 qualification do not apply to be pension transfer specialists as they do not offer this type of advice.

O&M Systems has created four A-Day letters which advisers can use to contact clients, available on its website.

Miller says: “Most IFA firms have a small number of clients that might be affected by the fund limit but dozens could be affected in other ways.”

Scottish Widows head of pensions market development Ian Naismith says: “With the current uncertainty around the position on transfers after A-Day, there is a danger that IFAs will do nothing until the situation is resolved. That could be a big mistake and not leave enough time to take any action needed before A-Day.”

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