Stephen Lowe of Just clearly thinks that the redress project that is going ahead for British Steelworkers ill-advised to leave their pension scheme has focused minds at the FCA on the need for income in retirement.
Citywire reports Lowe as saying that
the industry will feel the ‘legacy’ of the British Steel Pension Scheme misselling by advisers for years to come, and the lessons learned from the ongoing scandal will play a large part in the FCA’s retirement income advice review findings.
I am sure Stephen is right. There is in an elision of thinking between TPR and the FCA that is most evident in their joint interest in measuring Value for Money but is likely to re-emerge when the DWP launches its latest consultation on “decumulation” this summer. The FCA’s Retirement Income Advice Review is just one strand in the web. But it is a “thematic review” which means it will be ongoing and important.
This review is a piece of discovery work to explore how financial adviser firms are delivering retirement income advice and assess the quality of outcomes consumers are getting. It is due to report at the end of 2023.
There’s no surprise in this, we are currently in what I have called pension’s Strait of Hormuz, where hundreds of thousands of savers find themselves in a choke point – able to access their pension pots but with precious little assistance. Of course help is at hand from Pension Wise, MaPS and from the managers and trustees of the pension pots they can draw from, but most people recognise what they really need is a hand at their tiller, the hand of advice.
Those who have by luck or judgement saved sufficient for their pots to pay for the advice needed, can employ advisers to manage their financial affairs so that income meets outflows and the money lasts as long as they do.
Those who can’t afford an adviser could cash in their chips and buy an annuity – possibly from Stephen Lowe’s employer – Just.
But the steelworkers of Port Talbot , Scunthorpe and Motherwell – who have lost their pension promise from the British Steel Pension Scheme will , unless a better plan is suggested, not get the redress of returning to the new BSPS or even the PPF. Instead they will either receive cash compensation or a top-up to their personal pension.
If the FCA are thinking about redress, perhaps they ought to think outside the box, surely there is a better way to compensate people for their loss of pension.
And surely the 700,000 savers who navigate pension’s Strait of Hormuz, do not need to be quite so much in peril as they have been recently.
Why am I not surprised by the Pavlovian opening remarks?
In the last few days your blog has given an example of a “loss” based on the difference in two TVs each at the opposite ends of the interest rate spectrum over a three-year period. A good example of guidance v advice and its effect for one individual. (Also, an example of client’s hindsight wisdom)
Is it always the case that a TV should not be taken?
The BS advice to take the TV at a time when market interest rates were at historic lows may have been correct given a members personal circumstances.
Why the total advise was wrong in the BS case: –
1.Universal premeditated course of action fueled by greed and ignorance
2.Elevated risk inherent in the investment funds recommended
The confirmational bias in the pensions world has resulted in the abismal failure over decades to provide meaningful resources for the individual to have income beyond work.
Polovina statements abound masquerading as wisdom