View more on these topics

Making enhances

Unlike a number of advisers in the enhanced transfer value space, I have ongoing concerns with projects that allow the member to take the enhancement offered to them as cash.

I have had numerous discussions with the FSA on this point and despite the fact that our position continues to cost us revenue, we have held an anti-cash stance when other advisers both corporate and individual see cash as a way of improving take-up.

However, the pension industry remains acutely aware that any solution to reduce pension liabilities will more than likely be seized with open arms as a way of helping employers reduce potentially crippling pension liabilities. For these companies, it is vital that any such exercise is run thorThe pension industry is aware that any solution to reduce pension liabilities will more than likely be seized with open arms as a way of helping employers red-uce potentially crippling pen-sion liabilitiesoughly and allows indiv-iduals members to reach an informed decision.

I concede that there is certainly a place for cash enhancements, notably where the cash is in excess of the total transfer amount needed to provide the member with a realistic chance of matching or exceeding the projected scheme benefits at retirement and also where the member’s current finan-cial circumstances make imme-diate cash more important than future pension.

A typical example here will be the significant number of members with high credit card or store card debts that they are struggling to repay. For them, even a modest amount of cash now could critically improve their situation.

In this case, the member needs to understand the additional monthly contributions needed to top them back up to a full benefit.

There is a point where both company and member can benefit from cash enhancement. Provided the member understands the risks that they are taking, has enough risk appetite to accept those risks and has an enhancement from the company that is generous enough to give them a very good chance of at least matching the benefits given up, then a win/win is possible.

Care is needed not to disadvantage a significant number of employers or employees.


Yorkshire BS launches two new drop-lock mortgages

Yorkshire Building Society has launched two new tracker products which allow customers to switch to a fixed rate at any time during the loan term without charge. The products, which have both have loan terms of three years, are priced at base rate plus 1.79 per cent, for a fee of £995, and base rate […]


£150K limit in complaint shake-up

The regulator has increased the Financial Ombudsman Service’s award limit from £100,000 to £150,000 and confirmed new complaint-handling rules for firms. In a paper on consumer complaints, published last week, the FSA says the maximum compensation limit will rise to £150,000 in January 2012. The regulator first floated the idea of an increase to the […]

Helm Godfrey acquires Truestone employee benefits business

Helm Godfrey has acquired Truestone Asset Management’s employee benefits business as it expands into the corporate advice market. The firm says turnover for the combined business will rise to over £7m as a result of the deal. John Deacon will continue to head up the employee benefits business under the Helm Godfrey banner but the […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    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