Com­pen­sa­tion for pension trans­fer de­lay

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

Savers frus­trated by fi­nan­cial ad­vis­ers’ re­fusal to help them move “fi­nal salary” pen­sions may be able to pur­sue them for com­pen­sa­tion.

The Fi­nan­cial Om­buds­man, the ar­bi­tra­tion ser­vice, has awarded £50,000 to a saver – known only as “Saul” – af­ter the value of his pension dropped while he was await­ing a re­sponse from an ad­viser.

Ad­vis­ers have been shocked by the de­ci­sion, as it had been thought that re­fus­ing to work with a client gave pro­tec­tion against claims. A quar­ter of a mil­lion peo­ple have swapped fi­nal salary pen­sions – which pay a guar­an­teed in­come for life – for “de­fined con­tri­bu­tion” plans since Ge­orge Os­borne (pic­tured) changed the rules in 2015. The lat­ter of­fer more flex­i­bil­ity and ac­cess to cash lump sums, and are more tax-ef­fi­cient on death.

But un­der govern­ment rules, mov­ing a pension worth £30,000 or more must be signed off by a spe­cial­ist ad­viser. Strictly, it does not mat­ter if the ad­viser rec­om­mends a move, but in prac­tice ad­vis­ers are re­fus­ing

to help un­less they are con­fi­dent of ap­prov­ing a trans­fer. That is the sit­u­a­tion Saul found him­self in.

He had been given an of­fer of about £650,000 to give up his com­pany scheme as long as the trans­fer was com­pleted within 90 days. He spoke to an ad­viser who, af­ter much chas­ing, re­fused to give him ad­vice and sug­gested he find some­one else to help.

The trans­fer of­fer ex­pired be­fore Saul could find an­other ad­viser who was will­ing to help. He did even­tu­ally man­age to move his pension, but in the mean­time the trans­fer value had dropped by £50,000.

Af­ter an un­suc­cess­ful com­plaint against the first ad­viser he went to the om­buds­man, who ac­cepted that the ad­viser had the right to refuse to ad­vise Saul but said it was “not fair or rea­son­able” to have “taken so long to reach that de­ci­sion”. It or­dered the ad­viser to pay the dif­fer­ence be­tween the two trans­fer val­ues plus a few hun­dred pounds in com­pen­sa­tion “to re­flect the trou­ble they’d caused”.

The vol­ume of pension trans­fers has surged over the past three years, driven partly by the at­trac­tion of the “pension free­dom” re­forms, as well as un­usu­ally high trans­fer of­fers.

Tele­graph Money has been in­un­dated with let­ters from pension savers who have found it all but im­pos­si­ble to speak to an ad­viser and as a re­sult are blocked from trans­fer­ring.

A trans­fer of £30,000 could equate to a pension ex­pected to pay just £1,000 a year, or even less.

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