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Why are all these changes happening to pensions?

The long term plan from the Government is to provide the foundations for the UK’s future economic security. One of the key aims of this plan is to nurture a new culture of saving, as this has not typically been the philosophy of those in current times. To encourage a reversal of modern day thinking – live today and worry about tomorrow later! Saving must be flexible and attractive in order to encourage people to take greater responsibility for their own financial future.

Following the recent Budget 2014 announcements, we together with other pension providers will need to make changes to some of our operational processes and procedures. Consideration will also be required from financial advisers on how to treat those customers who are making a decision about their retirement income in the coming year.

The Financial Conduct Authority (FCA) wants to ensure that customers are making informed decisions about their retirement, resulting from the radical Budget changes. Areas that advisers should review include:-

  • those client currently considering their retirement options
  • customers approaching retirement
  • those who applied for income drawdown shortly before the Budget,

These reforms will introduce a much wider choice for retirees over how they access the pension savings they have worked hard to save. Advisers need to make sure their chosen pension providers are able to promptly respond to the increased flexibility.

Through this process, financial advisers are likely to be reviewing clients existing pension arrangements with may lead to some consolidation. This is an area that the regulators have been reviewing and there is a heavy emphasis on trustees and scheme administrators to act with extreme due care and attention.

*Here are some of the things they will be looking out for:

  • receiving scheme not registered, or only newly registered, with HM Revenue and Customs
  • member is attempting to access their pension  before 55
  • member has pressurised trustees / administrators to carry out transfer quickly
  • member was approached unsolicited
  • member informed that there is a legal loophole
  • receiving scheme was previously unknown to you, but now involved in more than one transfer request.

*Source – The Pensions Regulator

Timescales on dealing with these pension transfers may take additional time to process whilst all the due diligence checks required are undertaken and satisfied. This should be borne in mind when definitive timings are required and need to be met, for example commercial property purchase.

We at Taylor Patterson offer an individual approach to our clients and have updated our range of pension products to reflect changes in client circumstances. We work closely with our professional introducers to provide a flexible approach to pension planning with the aim to meet clients goals and expectations.

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