Pension has finally landed - As an insistent client acting against advice -*DOORS CLOSED 03/09/2021*

Diplodicus

dunstonh said:

Diplodicus said:

May we just clarify something, Malthusian? Are you in a position to back up last week's statement I believe that is why the SSAS route is now being routinely proposed as the backstop option ?

    Do not mistake the contents of this thread as being the same as what happens in the real world.

Roger that. 
There is a world of difference.

xylophone

The biggest business risk to an adviser who provides a formal recommendation to stay in a DB scheme is that the client pops his clogs shortly after and his heirs put in a complaint.

 But surely as the heirs  would not have been  the clients of the adviser,  he owed them no duty at all?

How could such a complaint be upheld?

xylophone

The intent of the legislation is rightly that advisers advise and clients decide.

https://www.gov.uk/government/publications/pension-freedoms-a-qualitative-research-study-of-individuals-decumulation-journeys/pension-freedoms-a-qualitative-research-study-of-individuals-decumulation-journeys

Before the enactment of the Pension Freedoms legislation in April 2015 consumers were restricted in how they could access Defined Contribution (DC) pension pots. 

The Pension Freedoms legislation enabled consumers to flexibly access their DC pension pots from the age of 55 and use the funds for a wider range of options including cash withdrawal, retirement income products, or a combination of the 2. 

The Pension Schemes Act 2015 also prohibited transfers (other than in very limited circumstances) from unfunded public service Defined Benefit (DB) schemes into schemes with DC arrangements; and introduced a new safeguard to ensure individuals with pension benefits that offer guarantees of a secure income not available elsewhere, (such as those in DB schemes or DC schemes with guaranteed annuities) seek appropriate financial advice before they access the new flexibilities.

It seems to me that the intention of the legislation was to offer more options to those with DC pensions,  restrict the ability to transfer out of unfunded PS DB schemes and  (as far as possible),  protect those  in other DB  schemes from making potentially financially disastrous mistakes.

Malthusian

xylophone said:

 But surely as the heirs  would not have been  the clients of the adviser,  he owed them no duty at all?

How could such a complaint be upheld?

Advisers aren't attorneys and do not have an overriding duty to consider their client's self-interest alone. Otherwise they would never recommend inheritance tax planning.

The heirs would complain that dad worked all his life et cetera et cetera and wouldn't have wanted his heirs to get virtually nothing from his pension when he had the option of converting it to a lump sum that could be passed on 100% tax free. Especially given his fondness for a pie and aversion to a jog.

I'm not saying that it is a big risk when an adviser recommends retaining a DB scheme, only that it is the biggest risk. Not (as Zingy asserts) that the client cashes in their pension against advice and then complains.

The latter is still a risk (advisers have been found liable after a client went against advice on the grounds they didn't advise against the thing strongly enough) but the fact that the client went against the advice and broke the chain of causality dramatically raises the bar for a successful complaint.

Diplodicus

Malthusian said:

xylophone said:

 But surely as the heirs  would not have been  the clients of the adviser,  he owed them no duty at all?

How could such a complaint be upheld?

The heirs would complain that dad worked all his life et cetera et cetera and wouldn't have wanted his heirs to get virtually nothing from his pension when he had the option of converting it to a lump sum that could be passed on 100% tax free. Especially given his fondness for a pie and aversion to a jog.

Ah they "would", would they? Because their Dad was fat.

As someone going into bat every day for the DB pension transfer advice business model, Malthusian does seem to have the knack of shooting the feet off the folk he is trying to ingratiate himself with.

Got a link to those cases, Malthusian? 

Dale72

So what someone chose to do with their pension while they were alive might come back to bite an IFA once their dead? What a joke, no wonder the systems broken.

Diplodicus

May we just clarify something, Malthusian? Are you in a position to back up last week's statement I believe that is why the SSAS route is now being routinely proposed as the backstop option ?

Diplodicus

xylophone said:

The intent of the legislation is rightly that advisers advise and clients decide.

It seems to me that the intention of the legislation was to offer more options to those with DC pensions,  restrict the ability to transfer out of unfunded PS DB schemes and  (as far as possible),  protect those  in other DB  schemes from making potentially financially disastrous mistakes.

https://www.gov.uk/government/collections/pension-schemes-bill-2014-to-2015

Legislation is pretty explicit. This is on page 1 on primary legislation:

• new safeguards to support individuals if they wish to transfer out of their existing Defined Benefit scheme to access the new flexibilities

Note the keyword:  "support", not "stop."

I think we can all agree that the intent of pension freedom is to empower the individual, with whom the final choice rightly rests.

 An oblique link to a study of the decumulation journeys of 81 people doesn't challenge that principle.

dunstonh

Most equity release complaints are made by the children realising they are not getting all their inheritance.    

Advice is advice whether it involves no change, a change to a product or a new product.  Inaction can lead to a complaint just as easily as an action.

Linton

Diplodicus said:

xylophone said:

The intent of the legislation is rightly that advisers advise and clients decide.

It seems to me that the intention of the legislation was to offer more options to those with DC pensions,  restrict the ability to transfer out of unfunded PS DB schemes and  (as far as possible),  protect those  in other DB  schemes from making potentially financially disastrous mistakes.

https://www.gov.uk/government/collections/pension-schemes-bill-2014-to-2015

Legislation is pretty explicit. This is on page 1 on primary legislation:

• new safeguards to support individuals if they wish to transfer out of their existing Defined Benefit scheme to access the new flexibilities

Note the keyword:  "support", not "stop."

I think we can all agree that the intent of pension freedom is to empower the individual, with whom the final choice rightly rests.

 An oblique link to a study of the decumulation journeys of 81 people doesn't challenge that principle.

"Pension Freedom" was always a slogan.  I doubt if those who used it ever thought through the detailed implications.  But it doesn't matter.  What does matter is the law enacted by Parliament and the freedom of commercial companies not to take on business they believe would not be in their best interests.  So the situation is what it is.  If you want to constructively argue with someone I suggest your MP would be a more useful target.