View more on these topics

Standard Life: Govt should indemnify providers against auto-transfer misselling

Steve Webb 480 LibDems DWP

Standard Life wants the Government to indemnify providers against potential compensation claims if customers suffer detriment as a result of its decision to pursue a “pot follows member” automatic pension transfer system.

Last month, the Department for Work and Pensions published a consultation document confirming plans to introduce a new system which will mean pension pots will eventually move with employees automatically when they change jobs.

The Government is consulting on four different pension pot limits for the auto-transfers system above which the investor would need to actively choose to move their money.

The proposed limits are £2,000, £5,000, £10,000 and £20,000. Pensions minister Steve Webb has suggested the reforms will only apply to auto-enrolment pots.

Standard Life head of pensions policy John Lawson says: “The solution is completely flawed. If someone has a pension with valuable guarantees attached, for example, then an auto-transfer could cost them a fortune. The industry can see the problem of consumer detriment looming but the DWP is insistent on forcing this upon us.

“If the Government is going to steamroller ahead with this then we want a written undertaking that it is going to pay the compensation cost when all this comes to roost, because it will.”

Equity Partners UK IFA Kevin Tooze says: “Automatic pension transfers is a good idea in theory but there is clearly a lot more thinking to be done before it is workable in practice.”

A DWP spokeswoman says: “We will continue to work with the pensions industry and consumer representatives to consider how we might mitigate risk to individuals of automatic transfer.”

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Looks like a scene from “The Thick of It” – however instead of DoSAC read DWP !

    Bit of quality ‘blue sky thinking’ there then…

  2. Peter Timberlake 17th August 2012 at 11:32 am

    John Lawson is spot on and right to raise this issue now. History shows how ill thought through government proposals can lead to huge compensation bills.

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