Govt under pressure to raise pension transfer advice threshold

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The Government is being urged to raise the advice requirement threshold on safeguarded benefit pension transfers to £50,000.

Currently consumers are required to take advice when transferring out of a policy with safeguarded benefits, including defined benefits and guaranteed annuity rates, if the value of the pot is £30,000 or more.

But Hargreaves Lansdown and Royal London say the limit should be raised to help people struggling to find an adviser or who are unwilling to pay to access relatively small savings.

Hargreaves Lansdown head of retirement policy Tom McPhail says: “We’ve been looking at the DWP consultation on this and are minded to argue the threshold should be raised to £50,000 because below that you have supply side issues.

“One solution is to say we need to make sure there are good tools and guidance but we shouldn’t force people to take advice until their pot size gets above £50,000.”

Royal London has previously said the advice required should be removed completely for policies with GARs and replaced with an appointment with Government-backed guidance service Pension Wise.

Pension specialist Fiona Tait says: “My gut reaction is £50,000 probably does make sense. The major barrier is at what point can you provide a commercial advice service, and there will be a lot more advisers willing to take people on with that level of saving.

She adds: “A higher limit is a positive idea in the short term. In the long-term we’d like an advice market where it’s feasible to provide advice for £30,000 pots.”

A DWP consultation that addresses issues around valuing GARs closes on 11 January 2016.

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Comments

There are 4 comments at the moment, we would love to hear your opinion too.

  1. 19 weeks and counting since I instructed my IFA to transfer my DB pension away from the administrator into a pot for flexible drawdown, main motivation was to bequeath said pot to my kids, at this rate I might be dead before the transfer is completed.

  2. A higher limit lets more transactions occur with greater chance of them being done wrong, so open to complaint, redress, etc later………..

    Keep it where it is, or lower it.

  3. Steve, who are people that haven’t taken advice because their funds are below £50K going to complain to if they haven’t taken advice?

  4. Bob I think you will find that the FOS will find some way of awarding compensation.

    You do have to wonder at the fact that is product providers who are driving this so called pressure.

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