Pension rules under fire
Friday 21 April 1995
Those who were wrongly advised to switch their money out of their company pensions and into private schemes could find insurance companies refusing to reinstate them, the CA claimed.
The rules, issued by the Personal Investment Authority, the financial services watchdog, aim to tell independent financial advisers and insurance companies how to review investors' claims.
PIA members are expected to contact all their clients who were advised to opt out of occupational pensions and identify priority cases. Compensation for most priority cases - people who are dead, in retirement or close to it - must be in place by the end of this year.
In a separate document jointly issued yesterday by the PIA and IMRO, the fund managers' regulator, disciplinary action was promised against firms that gave bad advice.
Aggravating circumstances could include a firm ignoring rules or its senior management condoning poor sales practices. Imro and the PIA also outlined mitigating circumstances - for eample wherea firm has itself identified problemsand set about tackling them.
However, Neil Munro, the CA's deputy head of money group, said:
"We think that the PIA have watered down the original guidance given in October last year by the Securities and Investments Board (the City's leading regulator) when its report came out. There is a danger that some people who are entitled to compensation will not get it and those who do will not get enough."
Mr Munro singled out a clause in the PIA's guidance which allows insurance companies not to reinstate people into their former funds if the scheme trustees set to high a price for doing so. Insurers are then allowed to top up their policyholders' existing pensions to match the benefits formerly available in their old schemes.
Mr Munro claimed: "There is no way that a personal pension can match the guaranteed element of occupational pensions, particularly where employers pay contributions into them."
But his views were rejected by Geoff Lister, chief executive at Bradford & Bingley Building Society and also a member of the PIA board: "The rules on reinstatement are there because it is possible in some cases that an occupational scheme could charge a huge price for taking back someone. That would not be sensible for a company's policyholders who would have to pay the price."
Mr Lister added that his society, whose consultants give financial advice, welcomed the guidance notes: "All financial advisers should ensure that its procedures are followed.
"The society has already set aside £10m to compensate for any past errors and the process of identifying cases is already well under way."
- 1 Student jailed for hacking University of Birmingham computers to improve his grades
- 2 Smartphones are making children borderline autistic, says psychiatrist
- 3 Company breaks open Apple Watch to discover what it says is 'planned obsolescence'
- 4 Teaching profession headed for crisis as numbers continue to drop and working lives become 'unbearable'
- 5 The most powerful passports in the world
Student jailed for hacking University of Birmingham computers to improve his grades
Smartphones are making children borderline autistic, says psychiatrist
Nepal earthquake: More than 1,100 killed across four countries and in Mount Everest avalanche
Royal baby: Live updates as the wait continues for Duchess of Cambridge's second child
Hermann Goering's daughter fails to reclaim items looted by Nazi deputy during WWII
The sickening truth about food banks that the Tories don't want you to know
Migrant boat disaster: Ukip candidate mocks victims in sickening Twitter post
Nigel Farage wants the BBC to stop making programmes like Doctor Who, Strictly Come Dancing, and Top Gear
Global warming: Scientists say temperatures could rise by 6C by 2100 and call for action ahead of UN meeting in Paris
General Election 2015: Britain would become a 'communist dictatorship' under Ed Miliband and Nicola Sturgeon, claims wife of Michael Gove
Rupert Murdoch berated Sun journalists for not doing enough to attack Ed Miliband and stop him winning the general election
iJobs Money & Business
£24000 - £26000 per annum + benefits : Ashdown Group: A highly successful, glo...
£50000 - £55000 per annum: Ashdown Group: Business Analyst - Financial Service...
£18000 - £23000 per annum + OTE £45K: SThree: At SThree, we like to be differe...
£20000 - £25000 per annum + competitive: SThree: Did you know? SThree is the o...