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Meltdown averted but problems are still in the pipeline

Predictions of an admin meltdown after A-Day have pro- ven overblown but there are plenty of other problems around the corner, warned panellists at the Money Marketing Sipp round table.

Specialist pension IFA Richard Jacobs admitted his predictions of an A-Day meltdown, with providers buckling under increased volumes of business, have not happened.

He said providers have coped relatively well on a “raw admin” level and suggested that sev- eral providers have avoided potential admin problems by pulling out of some markets.

But he warned IFAs to expect further headaches, highlighting restrictions on alternat- ively secured pensions and the complexity of death benefit arrangements on different schemes as being of particular concern. He said: “There are a lot of nasties that will appear over the next few months as we get to grips with the twists and turns of simplification. I have no doubt this legislation is more complex than expected.”

Hargreaves Lansdown head of pensions research Tom McPhail compared A-Day with the Millenium Bug and said there have been no disasters so far. But he said: “The principle of simplification is not in any way supported by the underlying philosophy that pervades HM Revenue & Customs. It is striking that 90 per cent of the rules are very simple and there is a lot of good stuff in there.

“But that extra 10 per cent adds 300 per cent on the paperwork. Tax-free cash recycling is a very good example of this, as is dealing with shares in Sipps. The industry is still feeling its way.”

Worldwide Financial Planning IFA Nick McBreen said that A-Day has added comp- lexity to once simple proc- esses such as buying an annuity on the open market.

He said: “There is also now a raft of additional questions with things such as the life- time allowance coming in instead of yearly limits, which is pushing more responsib- ility towards the adviser and could be discouraging people from saving.”

McBreen also warned that clients ploughing money into property funds in Sipps will be the next scandal to hit the industry. He said: “I can quite safely say this is the next scandal waiting to happen as people are advised to pile into exposure to property and told this is the answer to their prayers.”

McPhail commented: “Property is certainly an overvalued asset class.”


Warning over limits to pension consensus

The Tories have warned the Government that their position on pension reform is “consensus with limits” and urgent work is required to address their concerns. At a Scottish Widows and Age Concern fringe event, Shadow pensions minister Nigel Waterson Waterson said: “We are in consensus mode for the right reasons. But it is consensus with […]

Matter of principles

Investment management is a crowded, highly competitive field in which everyone is trying to be different but the real opportunities for innovation are rare. Most of them turn out to be, at best, reinventing the wheel. At worst, they are blind alleys encased in the jargon of the times, which leave the client worse off […]

ABI chief blames contracting-out problems on IFAs

The Association of British Insurers chairman has effectively washed providers’ hands of contracting-out misselling, saying responsibil- ity lies at the door of advisers. Speaking at a Treasury select committee meeting this week, the ABI’s Keith Satchell responded to MP’s concerns about the potential misadvising of some groups to contract out, saying adv- isers handled the […]

The Day of (B)reckoning

A period of exceptional uncertainty started last Friday for the UK, including a fierce leadership battle in a deeply divided Conservative party, the timing of the trigger of the EU’s Article 50, as well as a potential referendum in Scotland, and Northern Ireland. Click here to read the full article


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