Pension transfer Gold Standard marks 1st anniversary

Launched on 9 April 2019 by the Pensions Advice Taskforce, the Gold Standard centres around a consumer guide designed to help the public better understand the features of a defined benefit pension scheme and what to expect from a regulated financial adviser.

Keith Richards, CEO of the Personal Finance Society and Chair of the Pension Advice Taskforce, said it was encouraging to see so many financial advisers choose to align with this consumer guide and to commit to nine key principles of good practice for advising on pension transfers.

However, while financial advisers continue to sign-up to the standard in the last 12 months, Mr Richards pointed out that a significant number are unlikely to re-register this year due to problems in obtaining affordable professional indemnity insurance forcing them to pull out of offering pension transfer advice and will continue to engage with policymakers to consider a proposed alternative solution.

Mr Richards said: “The hardening of the professional indemnity insurance market, and the prohibitive cost this has imposed on advisers, has meant some members dropped their permissions to advise on defined benefit pension transfers and come off the Gold Standard register.

“Undoubtedly, the coronavirus will have a further impact on advice businesses and access, meaning that further government attention needs to be given to pension freedom legislation. The significant falls in equity values make it both more expensive for trustees to fund transfers and more challenging for consumers to invest transferred funds – these factors are likely to significantly reduce demand for both advice and transfers.

“It is vital that the public can access affordable financial advice as highlighted in the government and FCA’s joint Financial Advice Market Review (FAMR) and we have called for urgent prioritisation in creating a fairer system of funding consumer protection, to include public financial awareness, engagement and protection.

“A more effective and sustainable solution for Savings and Investment Monetary Protection and Education Levy can be achieved by pooling the cost at the highest level funds under management. This would mean the entire investment sector would spread the cost of just a few basis points, pooled with sector fixed levy contribution’s to create a sustainable solution which would negate the need for PII also help to protect against the increasing scourge of scammers.”