by Michael Ormond on December 3, 2008
In a recent article in the Telegraph by Jon Swaine, he was basically reporting on the likely demise of private sector Final Salary pension schemes.
It mentions the fact that 90% of public sector schemes are Final Salary compared with 11% in the private sector – Dr Ros Altmann, a former Government pension adviser, warns this could get worse and that private sector Final Salary schemes could disappear altogether.
I agree with her that the problem has been building over a period of time. We now have more regulatory scrutiny than ever before, couple this with significant reduction in investment returns and you start to hit big problems for scheme trustees and employers who run these schemes.
We are finding huge increases not only in the actual cost of running such pension schemes but also the liabilities of the trustees who have the responsibility to do so. Any trustee would be worried about their responsibilities now and any employer would be concerned about the rising costs. This is why more and more firms are looking to expert and advice on how to limit their problems.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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by Michael Ormond on
A recent article on Time Online reported that AWD Chase De Vere Wealth Management, the financial advisors, has been fined £1.2 million by The Financial Services Authority (FSA). This is for serious failings leading to pensions mis-selling.
The FSA said this was because the firm mis-sold pension transfers and annuities. They also did not disclose the risks properly and clearly and basically didn’t treat their customers fairly.
This action demonstrates how serious the FSA takes mis-selling, and rightly so. This is not the first case involving a big fine regarding pension transfers and from the evidence I have seen of some companies regarding Pension Release, I would expect to see more fines in the coming year or so.
The problem has arisen, in part, due to changes made in recent years regarding pension’s legislation, and unfortunately there are too many firms, with salesman earning commission, who seem to be more concerned about the money they make instead of prioritising what is best for their potential clients.
This is an extremely complicated subject and there are too many new firms coming into the market who, on the surface, look like they know what they’re talking about and all too often, the salesman at “the coalface” are not experienced enough to do a proper and thorough job.
What these companies do is concentrate on all the benefits of pension release or pension transfers and do not spend enough time talking about the risks and making sure their clients understand what these risks mean to them.
It would not be right, for example, to promote the idea of releasing money form your pension “to provide emergency funds” or for “further investment elsewhere” – this would be wholly inappropriate and encouraging potential clients for the wrong reasons; after all, a pension should ideally be left until retirement age. A professional firm would know this is not what the FSA would be happy with and it is information easily available from the FSA. By both professional firms and individuals.
Michael Ormond is a Financial Advisor specialising in Pension Release services.
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