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So it was with bated breath that Chancellor Philip Hammond stood to deliver his November Budget speech. Rumours has been swirling for weeks that pensions could be hit with changes to taxation. It was suggested that this would be to pay towards the NHS deficit among other things. It was with great relief that when he sat down and we reviewed the actual Budget papers that this was all just speculation and there was little impact. This can only be a good thing as any meddling impacts the distrust that consumers have for the pensions system and makes it difficult for advisers to plan for the long term with clients. How many times have we heard that PCLS or tax-free cash as it is more commonly known will be scrapped? Every Budget for as long as I can remember.
With September’s CPI figures now being released we know what next year’s Lifetime Allowance (LTA) will be - £1,054,800. Whilst hardly a dizzying increase we are at least crawling in the right direction after years of being pegged back. I get a few surprised looks when I remind people that the original version of Finance Act 2004 included a clause that the standard lifetime allowance could only increase.
There has been a flurry of corporate results in the last few months from SIPP providers that have shown an increase in revenue due to the increase in SIPPs being set up due to the large number of DB transfers to SIPPs.
I was going to open by commenting that it’s the time of year when the budget rumour mill starts kicking into action, but of course this will only be the second Autumn Budget, so we’re more accustom to these things happening at the start of the year.
The FCA recently published its final report on the Retirement Outcomes Review which has some interesting ideas to improve the experience of non-advised consumers, but some of the areas could cause difficulties for the SIPP sector.

There was an interesting report from CoreData Research issued recently that showed full self invested pension schemes (SIPPs) have risen to the top of the wish list for advisers on platforms.

Over the last few weeks I’ve had a much higher than usual number of ‘interesting’ transfer out requests land on my desk. Maybe it’s the hot weather getting to people, but it’s curious how these things seem to be like buses – nothing for ages then all at once.

Transfers out to unknown schemes can cause providers a lot of headaches, and we’re largely in a no-win situation. There’s a lot of extra work to be done and at the end of it we either end up losing a customer or having one who’s a bit annoyed at having to stay put.

The recent Ombudsman ruling, Mr N v The Police Pension Scheme, shows the importance of completing appropriate due diligence for the transferring scheme – and the harsh consequences of getting it wrong (the scheme has been ordered to reinstate the member’s accrued benefits).



The most common type of “unknown” scheme we get requests to transfer to, are SSAS. A transfer to a scheme with a known SSAS provider involved can be fairly straightforward, but there are many DIY schemes with no other parties taking responsibilities. In most cases the individual hasn’t just taken it upon themselves to open a SSAS, there’s someone in the back ground recommending the course of action. Now this could be for legitimate planning purposes, or for something less above board.

We also get cases where our gut feel isn’t necessarily that someone is trying to pull a fast one on the client, but rather there’s just a handful of people involved who don’t understand pensions, so there’s a high risk of the scheme inadvertently falling foul of HMRC rules. On one of our recent cases we had two parties both saying the other was the Scheme Administrator, and denying it was them – which begs the question who’s reporting anything to HMRC?

As well as looking at the scheme and any other parties involved in the transfer request, it’s also important to look at the member’s history. Anyone washing funds in and out of a pension in a short space of time can be a red flag unless there is good cause.

The Pension Scams Industry Group (PSIG) have recently updated their Code of Good Practice, which gives some great pointers as to what providers should be looking for and questions to ask.

If you are advising on a transfer to a less well known scheme then you should be prepared for a few extra questions, and plan time in for the provider to complete their checks. On the plus side, the fact that there’s an FCA regulated adviser advising will add weight to the case for transfer.

Lisa Webster is technical resources consultant at AJ Bell
When the pension freedoms were introduced it meant radical changes in a short space of time, with providers scurrying round to be ready and the FCA playing catch-up after the event – most recently in the form of the Retirement Outcomes Review final report.

You could be forgiven for thinking that it was Groundhog Day again.

On Valentine’s Day this year I received not only a lovely card and flowers from my husband, but also an email from my financial adviser about a new specialist divorce service they were offering.
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