Being forced to use a Financial Advisor to transfer pension to pension.

dealyboy

Good to see you posting again @jamesd, always a required read ... and thanks for the education  .

xylophone

They were intended to apply to DB and did, via transfer out, with specific DB provisions added to the law including a new one barring transfers out of unfunded government DB, which had previously been permitted.

"Pension Freedom" was primarily directed at those with DC pensions, enabling individuals with such pensions a greater choice in how they accessed their retirement savings.

This is clear from  

https://commonslibrary.parliament.uk/research-briefings/cbp-8382/#:~:text=DB transfer rights,remain in their DB scheme.

The pension freedoms were not aimed at members of defined benefit (DB) pension schemes (which provide benefits based on salary and length of service) for the majority of whom, it was likely to be in their best financial interests to remain in their DB scheme.

However, they may have the right to transfer their benefits to another scheme. The Government recognised that the pension freedoms might make transfers from DB to DC schemes more attractive. It considered removing this right (Cm 8835, March 2014, para 5.15). Following consultation, it decided to maintain transfer rights for members of private sector DB schemes and funded public sector schemes (principally, the Local Government Pension Scheme).

and Review here.

 https://committees.parliament.uk/publications/8514/documents/86189/default/#:~:text=The pension freedoms gave DC,funds designed for this purpose.

Before the Pension Freedom reform,  those with DB pensions could exercise their right to a transfer out and indeed were not obliged to take advice on this (although as I recollect, taking such advice was recommended).

(s.48 of the Pension Schemes Act 2015) 

https://www.fca.org.uk/news/news-stories/advising-pension-transfers-our-expectations

jamesd

DC were definitely the primary target but as your quotes illustrate DB considerations were included.

Linton

jamesd said:

DC were definitely the primary target but as your quotes illustrate DB considerations were included.

DB pensions were included in the Act only to the extent that they could be affected by the freedoms given to DC pensions.  But what was implemented certainly did not conform to that people would generally understand by the political term "Pension Freedom", quite the reverse.

xylophone

certainly did not conform to that people would generally understand by the political term "Pension Freedom", quite the reverse.

But the Government (eventually) understood the damage a "free for all" could cause to the financially unsophisticated individual?

And presumably it had to protect the huge unfunded PS pension schemes (in effect itself)?

Linton

xylophone said:

certainly did not conform to that people would generally understand by the political term "Pension Freedom", quite the reverse.

But the Government (eventually) understood the damage a "free for all" could cause to the financially unsophisticated individual?

And presumably it had to protect the huge unfunded PS pension schemes (in effect itself)?

I agree the government could do little else than add a few ad hoc fixes once they realised the unintended consequences of what they planned to do.  Pity that it wasnt thought through earlier with a more coherent overall policy rather than a simplistic political sliogan.

jamesd

I agree that the DB portions were more about reducing freedoms, particularly for unfunded schemes. Yet the funded ones were then subjected to the increased desirability of transfers because of the freedoms.

Silvertabby

xylophone said:

certainly did not conform to that people would generally understand by the political term "Pension Freedom", quite the reverse.

But the Government (eventually) understood the damage a "free for all" could cause to the financially unsophisticated individual?

And presumably it had to protect the huge unfunded PS pension schemes (in effect itself)?

Exactly.  Many of those wanting to transfer out of the LGPS told me why they wanted 'their' money.  New kitchen, new car, daughter's wedding, take the family to Disneyland...... These were people who saw the Freedoms as a fabulous windfall, on a par with a lottery win.  Not one person told me that they were experienced financial investors, who reckoned that they could get a better return elsewhere.

If the transfer out applications from the unfunded public sector schemes were on a par with the LGPS (and I believe they were) then failing to call a halt would have resulted in a huge hole in the public coffers.

dunstonh

Exactly.  Many of those wanting to transfer out of the LGPS told me why they wanted 'their' money.  New kitchen, new car, daughter's wedding, take the family to Disneyland...... These were people who saw the Freedoms as a fabulous windfall, on a par with a lottery win.  Not one person told me that they were experienced financial investors, who reckoned that they could get a better return elsewhere.

The media didn't help it either.  In particular, when the BBC edited a live interview with Steve Webb to make it later appear that he was encouraging people to use it to buy a Lamborghini (they edited out where the interviewer specifically mentioned Lamborghini in the question and turned it from being a response to a specific question into what appeared to be an announcement).

Buying a Lambo spread over the media and became set in people's minds.