View more on these topics

Make the people who misinformed pay for pensions

Andrew Verity asked: “should Andrew Smith be praised or attacked for the dramatic last-minute amendment to the Pensions Bill?” (Money Marketing, May 27). He then goes on to say that he is politically neutral. It is a pity that people can&#39t be neutral on pensions.

In the same issue of Money Marketing, pension consultant Ros Altmann says the FSA should be held responsible and that they should pay compensation. That means that the insurance industry is once again going to have to pay the compensation because where does the FSA&#39s money come from?

Surely, the people who should be paying the compensation are the personal financial journalists, employees of the FSA, and trade union officials (individually) for leading people out of very good personal pensions in 1994 under the expert guidance of Helen Liddell and latterly Patricia Hewitt, who were vocal in their condemnation of IFAs. All of them made statements alluding to the fact that occupational pension schemes provided a guaranteed benefit.

Here come the double standards. Ros Altmann, Andrew Verity et al state that here was the written word “guarantee”. On the bottom of every illustration for low-cost endowment, it states that the benefits are not guaranteed, that only the death benefit is guaranteed and if it is an endowment insurance contract, that there is a sum assured to which bonuses will be added and they will be guaranteed.

Nowhere on any of those documents does it say that the mortgage amount will be guaranteed.

Where do Andrew Verity and Ros Altmann stand on that dilemma? On the pension front, occupational schemes, the press and others argue who said “guaranteed” and, therefore, who should be responsible for paying compensation, yet on the endowment front, we have an “implicit” (I think that is what the Treasury select committee referred to) guarantee which should result in compensation being paid.

If it was not so serious one could laugh oneself into a hysterical stupor.

Andrew Verity refers to the ASW workers who only have their unions to speak up for them. What were those unions saying when ASW workers with personal pensions were urged to seek compensation and have their money from their own personal pot paid back into an occupational scheme that has now got a huge hole in the bottom of its bucket?

Much of what is being said at the moment is conjured up by the trade union movement and much of 1994&#39s situation was conjured up by exactly the same people using exactly the same misguided approach.

Life is about risk and insurance is about the protection of risk – we call it risk management – and if others interfere with the process of risk management then we end up, as Andrew Verity quite rightly says,with the Pension Act 1995 perpetuating what in many observers eyes is a ridiculous absurdity.

The absurdity is the ill-informed leading the ill-informed and of lobbyists paid huge salaries to haunt the corridors of power to follow their own political and commercial ends.

Andrew Smith should neither be praised nor attacked for his amendment to the Pensions Bill. What he should do, and what Government should do, is ensure that the individuals who promoted the misinformation, and that includes the two MPs that I have already mentioned, pay their proportion of the compensation, at Ros Altmann&#39s £76m a year, for the next 20 years, to know what it is like to have one&#39s shirt ripped off one&#39s back.

The case histories that we have on ASW and other workers, coerced into moving from personal pensions to occupa-tional pensions can only conf-irm that personal choice and caveat emptor are far more effective mechanisms than busybodies postulating for personal gain.

Terence O&#39Halloran

Newland, Lincoln

Recommended

Batten looks to entrepreneur award final

IFA business Group 300 chief executive Chris Batten is through to the reg-ional finals of the Ernst & Young Entrepreneur Of The Year award. Batten has passed the first three stages of the nomination process and is waiting to see whether he will be selected for the national final in London. He has provided award […]

Tenet tells members it is ready for flotation

After two years of preparation, IFA group Tenet is telling its members that the company is in a strong position to go for a market listing. Chief executive Simon Hudson has contacted members of the 2,500-strong IFA group to tell them that the company has met its targets for listing and it expects to report […]

Verity&#39s view

When the FSA first got its powers, it was all too easy to view the new, statutory watchdog as having fewer teeth and a more docile nature than its self-regulating predecessor the Securities and Investments Board. After all, SIB had launched the biggest and most expensive compensation exercise ever attempted – the £15bn-plus review of […]

Halifax denies service claims Survey urges caution over WP balance sheets

The FSA&#39s push towards realistic balance sheets for with-profits life offices is welcome but a degree of caution as to how the figures will be interpreted must be shown, according to The Centre for Risk and Insurance Studies. In a preliminary analysis of the top 20 with-profits life ins-urers&#39 returns to the FSA, Cris, which […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    Leave a comment

    Close

    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm

    Email: customerservices@moneymarketing.com