Today we received our questionnaire from the FCA regarding actions that now need to be taken following receipt of the information we provided to them regarding defined benefit pensions.
If you are a Financial Planner, millennials - those aged roughly 18-38 - are potentially the next big client target group…but there’s a problem.
I ended my last commentary by expressing concern for all senior managers working with SIPPs – whether as a provider or adviser – given the ongoing regulatory uncertainty particularly around the responsibilities for investment due diligence. I drew attention to the new conduct rules that will come into force for all senior managers and staff with effect from 9 December as a result of the new Senior Managers and Certification Regime (SM&CR).
A new report out today from the FCA and The Pensions Regulator has thrown up some disturbing findings and also blown out of the water the myth that only the poorly educated and vulnerable are the victims of the pension scammers.
I’m back from a short break and while I was away a lot has happened: a general election has been called, Brexit has been postponed once again and Woodford has pretty much collapsed and been subject to a BBC Panorama investigation.
The woes of Woodford Investment Management have been well chronicled by Financial Planning Today and others. I will not repeat them hear suffice to say that the curtain is coming down on a painful episode in fund management, as Mr Woodford described it himself.
The recent developments involving Berkeley Burke SIPP Administration (BBSAL) have caused understandable concern and consternation for SIPP providers, advisers and SIPP investors.
Back in 2014, we overhauled our strategy at Informed Choice. With our 20th anniversary taking place, it was the natural time to inject some new life, energy and direction into the business.
The Financial Planning profession is heading in a new direction and there’s no better evidence of this than today’s (11 October) PFS Graduation Ceremony in the august surroundings of the Merchant Taylor’s Hall in the City of London.
I got back recently from a holiday in Central America. I learned to scuba dive in the Bay Islands of Honduras and then flew north to explore Guatemala. A wonderful experience all round.
“Plans can break down. You cannot plan the future. Only presumptuous fools plan. The wise man steers.” ― Terry Pratchett, Making Money
In a landmark ruling, the High Court has dismissed the claim brought on behalf of 3.6 million women whose state pension age has been increased sharply, often without their knowledge, writes former Pensions Minister Ros Altmann.
The judges ruled that the Government was correcting a past inequality against men, rather than discriminating against women, and was entitled to change pension ages at short notice and without due warnings.
This may not be discrimination, but it has caused real hardship
It was always going to be difficult to prove that a policy intended to equalise men and women's pension age was discriminatory. But many of those affected are suffering real hardship because successive Governments failed to properly inform women of the original 1995 Act changes, so they were expecting their State Pension at age 60 and had inadequate chances to prepare. That is perhaps more like maladministration than discrimination.
Equalising pension age, does not deliver equal pensions
They may start their State Pension at the same age, but this is far from pension equality as women generally have much worse pensions than men. Not only do older women have lower State Pensions, those in their early 60s are estimated to have just one third of the private pension wealth of men too.
Women lose out in pensions due to social norms and past disadvantage
Social norms caused women to lose out in pensions throughout their lives. When they were younger, they were often excluded from occupational schemes, were paid less than men and had to take time out for childcare. That meant their lifetime incomes are lower than men's and the increase in divorce rates also means women have lost the husband's pension they might previously have relied on.
State pensions are a state benefit, not a property right
The High Court concluded that Government can change State Pension rules, with Parliamentary approval, just as it can change other National Insurance benefits. Adjustments to social policy and controlling benefit expenditure are valid policy decisions. Of course, with an ageing population, rising longevity and pay-as-you-go pensions, the Government needs to control state pension costs, to protect younger generations of taxpayers.
Increasing State Pension age saved huge sums to Exchequer
Estimates suggest the rise in women's State Pension age between 2010 and 2016 saved over £5billion in public spending. There is a three-fold benefit for the Treasury. Firstly, not paying their pensions. Secondly, higher tax and national insurance receipts as women keep working while waiting for their State Pension. Thirdly, the additional should boost the economy.
But rising State Pension ages have increased poverty
Many of the women waiting longer for their state pension have been pushed into poverty. Research from the Institute for Fiscal Studies found one in five women aged 60-62 were in income poverty when their state pension age was increased to 63 by 2016. The study showed that men have been affected by rising poverty too, as the starting age for receipt of means-tested Pension Credit has increased in line with rising women's state pension ages.
Governments failed to properly inform people about their state pension age rising
Obviously, policy changes of such magnitude need to be communicated well in advance, so the women are given time to prepare for delays in starting pension receipt. Unfortunately, as the BackTo60 and WASPI campaigns highlight, the failure to communicate clearly and effectively has caused real problems for many of the women affected.
Baroness Ros Altmann is a Conservative peer and former Minister of State for Pensions and Child Maintenance
It was good to get to the CISI 2019 Financial Planning Conference in Birmingham this week and meet some old faces - always one of the highlights of these events for me.