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Cash-strapped trying to bend pension transfer rules Cash-strapped trying to bend pension transfer rules
(3 months later)
People with a final salary pension who are desperate to access their cash are asking financial advisers to bend the new pension freedom rules.People with a final salary pension who are desperate to access their cash are asking financial advisers to bend the new pension freedom rules.
Those with defined benefit pensions worth more than £30,000 are required to have a professional consultation before transferring their money out.Those with defined benefit pensions worth more than £30,000 are required to have a professional consultation before transferring their money out.
But firms say clients are asking for confirmation they have had a consultation when none has taken place.But firms say clients are asking for confirmation they have had a consultation when none has taken place.
Advisers say they are refusing such requests.Advisers say they are refusing such requests.
Pension FreedomPension Freedom
The new Pension Freedom changes, which were introduced two months ago, were designed to allow people much greater flexibility.The new Pension Freedom changes, which were introduced two months ago, were designed to allow people much greater flexibility.
But they came with some safeguards, particularly for people in final salary schemes who are guaranteed a certain income on retirement, regardless of how their pension fund investments have fared.But they came with some safeguards, particularly for people in final salary schemes who are guaranteed a certain income on retirement, regardless of how their pension fund investments have fared.
Radio 4's Money Box programme believes hundreds of people in these schemes have been contacting financial advisers desperate to get their forms rubber stamped so they can transfer the money into another scheme that will allow them access to some of their cash.Radio 4's Money Box programme believes hundreds of people in these schemes have been contacting financial advisers desperate to get their forms rubber stamped so they can transfer the money into another scheme that will allow them access to some of their cash.
Ed Fairey, managing director of the independent financial advice firm, Fairey Associates, says from the moment the pension freedom changes were announced, his industry knew what to expect.Ed Fairey, managing director of the independent financial advice firm, Fairey Associates, says from the moment the pension freedom changes were announced, his industry knew what to expect.
"It's human nature, isn't it?" he told the BBC. "I might be dead tomorrow, I want my jam today. They don't want to pay anything. They want us to rubber stamp the transaction to say advice has been given.""It's human nature, isn't it?" he told the BBC. "I might be dead tomorrow, I want my jam today. They don't want to pay anything. They want us to rubber stamp the transaction to say advice has been given."
Mr Fairey says his firm has received numerous requests to rubber stamp final salary transfers without a proper consultation.Mr Fairey says his firm has received numerous requests to rubber stamp final salary transfers without a proper consultation.
His firm has refused them all, and this has left people frustrated.His firm has refused them all, and this has left people frustrated.
'Guaranteed income''Guaranteed income'
Another firm Money Box contacted said it had received more than 20 requests to provide evidence of a consultation which had never taken place.Another firm Money Box contacted said it had received more than 20 requests to provide evidence of a consultation which had never taken place.
Pension fund trustees would need more evidence than a signed letter from an adviser to release funds.Pension fund trustees would need more evidence than a signed letter from an adviser to release funds.
And they have told Money Box they are confident they would be able to identify clients who claimed they had had advice when they had not.And they have told Money Box they are confident they would be able to identify clients who claimed they had had advice when they had not.
Chris Hannant, director general of the Association of Professional Financial Advisers, says his firm has been contacted by some potential clients who have already tried and failed to persuade five different firms to get their requests rubber stamped.Chris Hannant, director general of the Association of Professional Financial Advisers, says his firm has been contacted by some potential clients who have already tried and failed to persuade five different firms to get their requests rubber stamped.
And he said people should think hard before trying to transfer out.And he said people should think hard before trying to transfer out.
"For most people, sticking with a defined benefit scheme is actually a good thing. It's a guaranteed income until you die," he said."For most people, sticking with a defined benefit scheme is actually a good thing. It's a guaranteed income until you die," he said.
Mr Fairey is concerned that if people try enough financial advice firms, they might find one that is prepared to help them get their funds released without a proper consultation.Mr Fairey is concerned that if people try enough financial advice firms, they might find one that is prepared to help them get their funds released without a proper consultation.
"Consumer are used to shopping around," he said. "They'll hit multiple advisory firms; they'll learn what they need to say to get the transaction done. Or they'll find a business which is unscrupulous enough to allow them to self harm.""Consumer are used to shopping around," he said. "They'll hit multiple advisory firms; they'll learn what they need to say to get the transaction done. Or they'll find a business which is unscrupulous enough to allow them to self harm."
Mr Hannant has warned advisers they should never be tempted to sign off "advice" that has never been given.Mr Hannant has warned advisers they should never be tempted to sign off "advice" that has never been given.
"They have to make recommendations they believe are suitable for the client," he said. "They should never be rubber stamping any proposed course of action.""They have to make recommendations they believe are suitable for the client," he said. "They should never be rubber stamping any proposed course of action."
A Department for Work and Pensions spokesman said: "Trustees have a legal duty to act in the best interests of the scheme and their members. As part of this, they will need to ensure that they do their due diligence when confirming that a member has taken advice, and that certificates provided by the member are genuine."A Department for Work and Pensions spokesman said: "Trustees have a legal duty to act in the best interests of the scheme and their members. As part of this, they will need to ensure that they do their due diligence when confirming that a member has taken advice, and that certificates provided by the member are genuine."
Money Box is broadcast on Saturdays at 12:00 BST on BBC Radio 4 and repeated on Sundays at 21:00 BST. You can listen again via the BBC iPlayer or by downloading Money Box podcast.Money Box is broadcast on Saturdays at 12:00 BST on BBC Radio 4 and repeated on Sundays at 21:00 BST. You can listen again via the BBC iPlayer or by downloading Money Box podcast.
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