View more on these topics

Tisa says Government can’t ban ETVs

The Tax Incentivised Savings Association says the Government would be unable to ban enhanced transfer value exercises within the current legislative framework.

Last month, pensions minister Steve Webb issued a stinging rebuke to firms offering defined-benefit pension scheme members an up-front cash payment to move their savings into a less generous definedcontribution arrangement.

Webb also cited evidence that “a high proportion” of people who are advised not to accept an offer ignore the advice, leading to speculation that ETV exercises could be banned altogether.

Tisa director of policy Malcolm Small says: “It is very tempting for the Government to be prescriptive and say all ETV exercises need to be banned but I do not think it can do that within the framework of existing legislation.

“There are some circumstances where an ETV is a valid approach in terms of safeguarding a scheme’s interests, such as when you have a few very high earning, deferred members who pose a liquidity threat to remaining members.”

A Department for Work and Pensions spokeswoman says officials are “considering options” to tackle the problem.

Hargreaves Lansdown head of advice Danny Cox says: “I would like the FSA to get more involved with ETVs. If it came out with guidance saying it does not like ETVs, then employers and advisers would not want to go anywhere near them.”

Under current rules, pension schemes are entitled to make enhanced offers to members, provided that they are “fair and reasonable”.

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

    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