Fi­nal salary pen­sion trans­fers stall as High Court throws the rules into doubt

The Daily Telegraph - Your Money - - MONEY - Sam Brod­beck

Peo­ple who at­tempt to swap fi­nal salary com­pany pen­sions for cash are be­ing left in limbo fol­low­ing a con­tro­ver­sial le­gal judg­ment.

More than a quar­ter of a mil­lion savers have taken ad­van­tage of highly gen­er­ous cash of­fers to o give up mem­ber­ship of th­ese work­place kplace pen­sion schemes in re­cent years. ars.

A pen­sion that promises to pay £30,000 a year might be swapped pped for £900,000 or more in cash, h, for in­stance. Savers are also at­tracted cted by the ex­tra flex­i­bil­ity and tax treat­ment eat­ment on death of per­sonal pen­sions. s.

It is thought that £34.2bn was with­drawn from com­pany schemes hemes in 2017 alone.

But fu­ture trans­fers are now w un­der threat in the af­ter­math of a High Court rul­ing that will force rce Lloyds Bank­ing Group to equalise alise ben­e­fits be­tween male and fe­male staff.

Ac­cord­ing to Royal Lon­don, n, the mu­tual pen­sion firm, some me schemes have put a tem­po­rary y block on trans­fers fol­low­ing the he court case.

Three fe­male mem­bers of the high street bank’s scheme e ar­gued that their pen­sions had d been un­der­val­ued as a re­sult of “guar­an­teed min­i­mum pen­sions” (GMPs) that ap­plied when staff were taken out of the earn­ings-re­lated state pen­sion be­tween 1990 and 1997. For decades schemes ar­gued that they did not have to cor­rect the in­equal­i­ties cre­ated by the GMP rules. Los­ing the case mean means Lloyds is ex­pected to have to spend u up to £150m re­solv­ing the GMP is­sue. is­sue The bill for other British firms with fi­nal salary s li­a­bil­i­ties could be as high as £15bn £15 in to­tal, ac­cord­ing to es­ti­mates by b con­sul­tancy LCP. Royal Lon­don’s Lo Sir Steve Webb warned th that the rul­ing’s lack of clar­ity was mak­ing makin schemes hes­i­tant to ap­prove trans­fers. tr He said: sa “It is vi­tal that pen­sion savers who are con­sid­er­ing a trans­fer transf out are not left in limbo while the in­dus­try works out what ex­actly this rul­ing means. “The “Th pen­sions in­dus­try and pen­sion pensi savers ur­gently need to hear from f the au­thor­i­ties what they s should do now with re­gard to pen­sion pen scheme val­u­a­tions and pen­sion pen­sio trans­fers. “With Wit some pen­sion trans­fers al­ready on hold, a pub­lic state­ment is ur­gently ur­gen needed.” Gov­ern­ment Gove rules force savers to take fi­nan­cial ad­vice when they trans­fer a fi­nal salary pen­sion val­ued at £30,000 or more. Strictly speak­ing, the ad­viser does not need to rec­om­mend a move for a trans­fer to go ahead. How­ever, in prac­tice savers have been left frus­trated by pen­sion firms that will not ac­cept a trans­fer un­less it is signed off by an ad­viser.

The Fi­nan­cial Om­buds­man Ser­vice said this week that it had re­ceived more than 300 com­plaints re­lat­ing to fi­nal salary trans­fers since 2015. De­spite this rep­re­sent­ing just 2pc of all com­plaints, the om­buds­man said th­ese trans­fers were a “ma­jor con­cern”.

Most dis­putes were about de­lays in re­ceiv­ing fi­nan­cial ad­vice. Of th­ese com­plaints, 44pc were up­held.

Around 30 com­plaints were made against an ad­viser who would not rec­om­mend a trans­fer.

There has been a boom in trans­fers since 2015, when re­forms known as the “pen­sion free­doms” made “de­fined con­tri­bu­tion” and per­sonal pen­sions much more at­trac­tive.

Fi­nal salary schemes pay a guar­an­teed, in­fla­tion-linked in­come for life but were not in­cluded in the re­forms. As a re­sult, pay­ments typ­i­cally stop when the mem­ber or their spouse dies.

The City watch­dog, the Fi­nan­cial Con­duct Au­thor­ity (FCA), has paid tens of thou­sands of pounds in com­pen­sa­tion to con­sumers who com­plained about in­cor­rect in­for­ma­tion on a cru­cial in­dus­try reg­is­ter, it has emerged.

Tele­graph Money lodged a Free­dom of In­for­ma­tion re­quest to es­tab­lish how many peo­ple had lost out be­cause of poor qual­ity in­for­ma­tion

Sir Steve Webb, a for­mer pen­sions min­is­ter, said schemes had be­come hes­i­tant to ap­prove trans­fers

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