The pension transfer industry can be a minefield for individuals looking to shop around and find the best deal. We are a free pension finder service that aims to not only locate specialists that can help you find a suitable deal, we also look to keep you up to date with the latest rules and regulations within the pension industry. There have been a number of complaints against unscrupulous companies performing less than ethical actions in relation to pension transfers. For example, there has been criticism over the practice of offering cash incentives to the public in order to get them to make a transfer. Our goal is to put you in contact with specialists that consistently try to meet the changing laws as well as remaining in compliance with industry regulations.
A new voluntary code of practice was published on 8 June 2012 and involved input from representatives of the Department of Work and Pensions. This code of good practice was requested by Steve Webb, the Pensions Minister, and asks pension companies to follow a list of regulations which are explained below.
No Cash Incentives: Pension companies are not allowed offer cash payments that are dependent on whether or not a customer accepts an offer for a pension transfer. Small incentives such as gift vouchers are permissible but only if the individual is not pressured into accepting an offer.
Independent Advice: A customer must be given independent financial advice which should show that the benefits they receive with a pension transfer are greater than the benefits given up.
Communication: All communication with customers must be clear with no attempts made to confuse or deceive them. The initial offer must explain the downsides of the pension transfer.
Records: A record of incentives offered and customer responses must be kept. It is also necessary for financial advisors to keep a record of when someone chooses an offer which is contrary to the financial advice given.
Pressure: No pressure must be placed on the customer and they must be allowed ample time to make up their mind. A three month period for making a decision and a two-week cooling off period after completing forms are considered as fair benchmarks.
Vulnerable Customers: Those over the age of 80 can be offered incentives on an opt-in basis but a strict vulnerable client policy must be followed.
Good Faith: All parties in a pension transfer discussion must be aware of their roles in negotiations and must act in good faith.
At present, this new code of practice is voluntary but it is possible that additional legislation will be added by the government if they feel that the current code is not being followed. At Pension Finder, we will do everything we can to put you in touch with a pension advisor that follows the above code of practice. We assist dozens of people with pension transfer issues and hope to see that number swell as the importance of making the right decision regarding pensions really begins to hit home.
This article has been written in good faith. It is believed to be accurate at the time of writing and is for information only.