Pensions minister Steve Webb says providers should not block transfers from defined benefit schemes even if an adviser has not recommended the move.
Last week, Money Marketing revealed how some providers would only accept transfers from members with DB pensions if an adviser had given a positive recommendation. Providers’ reluctance to receive insistent customers could potentially block millions of people’s access to the new Budget freedoms.
But speaking to Money Marketing, Webb says: “We recognise that for many people staying in DB is the right thing to do but the reason we haven’t banned it is because ultimately we want informed consumers to decide what’s best for them.
“Provided there has been genuine independent financial advice and it has been clearly explained to them what the consequences of their choices are, I don’t think personally it’s the job of the receiving scheme to override the preferences of the individual.”
The pensions minister also did not rule out creating a “backstop” for people who do not take up the offer of free guidance at retirement. Last week, FCA interim head of department for savings, investments and distribution Maggie Craig said the regulator is not working on a backstop.
Webb says: “We are thinking about it. We are very clear that we want to make it the norm that you have the guidance. We are absolutely focused on maximising take-up of the guidance and enabling people to see how important it is.
“Clearly we are going to be testing the take-up numbers and if, as we change our assumptions, it looks to us as if there will be a lot of people who don’t [take up the guidance], clearly we’ll have to do more to make sure those people are looked after.”
Earlier this month, Money Marketing revealed that just 2.5 per cent of savers had accepted the offer of guidance in a major Legal & General pilot of the scheme.