Standard Life has been referred to the Financial Ombudsman Service for applying penalties to pension policyholders who transfer out of the with-profits fund when they are past their nominated retirement date.
Carr & Associates IFA Peter O’Hare says one of his clients has put in a claim to the FOS to recover £59 in penalty charges for transferring out of the with-profits fund to buy an annuity with another provider after his NRD had passed.
O’Hare accuses Standard head of pensions policy John Lawson of hypocrisy for criticising Royal London over charging policyholders commission for exercising the open-market option.
He says: “I can see the Royal London stance because it was probably part of the terms and conditions. I would challenge Standard to show me where it says a penalty will be applied in its terms and conditions.”
Lawson says the situation is different because Standard is not gaining financially from the penalty, which is put in place to protect remaining customers in the with-profits fund.
Lawson says: “We used to allow customers to transfer to another provider without applying a market value reduction but we do not allow it now after their NRD because people were not actually retiring but were transferring the money to other providers’ with-profit funds.
“We have been forced to penalise those people because they were abusing this and more cases were abusing it than those who were genuine.”