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Shift to money purchase fails to benefit IFAs

Few IFAs have benefited from the trend away from defined-benefit to defined-contribution pension schemes.

Seventy-one per cent of respondents to the State of the IFA Nation poll say they have not seen an increase in corporate business as a result of the move towards DC.

IFAs believe that while the big employee benefits consultancies have done well from pension schemes seeking help in making the transition, most companies do not naturally turn to IFAs for this sort of advice.

Respondents voted overwhelmingly by 95 per cent in favour of pension simplification, saying it will help to reduce the complexity of the pension landscape.

But 57 per cent believe the minimum income guarantee will deter clients from saving for retirement compared while 41 per cent say it will not.

Knightsbridge Financial Services IFA John McClelland says the Government will be forced into reworking the trade-off between means-testing benefits and private provision so he does not believe the Mig would necessarily deter a younger client from saving for retirement.

Hughes Carne IFA director Keith Jarman says: “We will continue to see a trend towards defined-contribution schemes. However, it only benefits the employee benefit consultants and not the provincial high-street IFA.

“The bottom line is that the percentage of people who do not contribute to a pension do not do so because they simply cannot afford to.”

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