Watch out for DB exit ‘bribes’

IFAs must beware of advising clients on “bribes” offered by employers to leave final-salary pension schemes.

Syndaxi Financial Planning managing director Robert Reid says firms are effectively trying to bribe staff to quit schemes by offering payouts.

He says staff would be worse off and urges the FSA to investigate if employers are carrying out advice which should be regulated. Reid says: “This rerun of pension misselling has the potential to land at our door but only if we act without thin-king. IFAs must resist the option of providing advice on these bribes or, worse, help employees transfer benefits. The FSA can help by looking at whether in constructing the offer to leave, including their bribe, this constitutes advice and is a regulated activity.”

Wragge & Co pension support lawyer Ruth Bamforth says: “We do not encourage employers to use inducements but we advise them if they do. IFAs need to make sure their contracts with employers are crystal clear and get out if it looks like the employer is trying to pull a fast one.”