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Independent view

Transfers. Opt-outs. Non-joiners. Three simple words that have caused

immeasurable pain for so many advisers and clients alike – and the

pain is still present for all to see.

Industry commentators exclaim left, right and centre about the

injustices of the new review culture after the “father of reviews”

but nothing ever sticks. Nothing is ever followed through and none of

the life offices seem to really care.

After the precedent of the pensions review, adviser firms had

endowments, FSAVCs and split-caps to contend with. And as a result we

all have to deal with the farce that is professional indemnity.

Having failed to fully appreciate the different types of pensions

that needed reviewing – for we all agree that opt-outs and

non-joiners did need reviewing – the way was set for any class of

speculative business to be “reviewable” and to give the customer the

benefit of “early hindsight”.

Never mind that at maturity it is possible that it was good advice

after all. It never fails to amaze me that this early hindsight

clause is not picked up by the media.

And if the powers that be have learnt the “lessons” from the pensions

review, does that not imply an admission of guilt? I cannot for the

life of me decide what the difference is between a transfer and an

endowment. They are both aiming to build a fund of money that might

or might not be better than a different course of action. But until

we reach the end point how can we decide on the merits of the advice

part way through?

ASW Steel Group employees are a good example to mention here. Had

they realised they were last in the pecking order on wind-up, they

might have changed their attitude to saving. What if they had

transferred or opted out, or not even joined – would they be claiming

under the pensions review? Or perhaps they wished they were a little

older and therefore would benefit by being a pensioner now?

These options were available to them at all stages – it is just that

the one they chose is the one that seems to be paying the smallest

dividend. I wonder if there are any ASW transferrers (let alone

optouters or non-joiners) in the pensions review? Or are they

counting themselves lucky at the moment, having made what at present

seems like a good decision?

We were involved in helping several “Maxwelled” members some years

ago. Their current employer had about a dozen staff with missing

benefits. Our job was to organise replacement funds that were to be

balanced by whatever was recovered when the Maxwell liquidators had

done all they could.

Ironically, all members came away with very handsome benefits in the

end and were mightily relieved at the outcome. This does not, of

course, recompense them for their considerable anxiety, which was

dreadful in the early days of the proceedings.

The difficult thing to say to the ASW members is that the pecking

order on wind-up is known and that nothing in life is ever guaranteed

– not even their pension. Information to make a judgement was

available to the members all along.

It is just they chose not to investigate fully, particularly in the

wind-up scenario, probably because it was the last thing they

expected to happen. Well that line does not work anymore these days.

We all know that even the biggest companies can go bust, along with

their pension funds.

What is also impossible to predict is the eventual benefit paid to

these people. If the liquidators do a good job, they might be

pleasantly surprised. They are quite rightly worried, but it is a

little ironic in the context of the pensions review.

Just imagine the utter pandemonium in 10 or 15 years time when we

have double digit inflation and soaring stock markets (again) –

giving personal pension/Section 32 transfers better benefits than

(defunct?) final-salary schemes.

Rest assured thousands of hard-done-by advisers will no doubt be

coming out of retirement and baying for blood (and compensation) from

the then regulator. Of course, the excuse from the regulator will be

“well don&#39t blame us, it was the FSA&#39s mess and they don&#39t exist any

more”. Or should that be the PIA? To be honest, I am not really sure


The PIA/Treasury completely misunderstood the difference between the

various types of pensions and the mess we are all in is the result of

that. The Treasury is now furiously back pedalling and insisting it

is not their fault. Unsavoury though it may be, someone has to put

their neck on the block and tell people how it really is – I just

wish there were more of us doing it.

Tom Kean is compliance officer at The Analysts


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