Some of you know my professional views on pensions. This latest debacle surprised even me - and I am cynical as they come.
Background
The FSA went round saying that Occupational schemes were "guaranteed" - they never were because the scheme was only as safe as the company/employer that ran the scheme. As many poor people who relied on their employers scheme are now finding out.
Despite the parliamentary ombudsman deciding that the government and the Regulator, the FSA was wrong to say this and that those affected should be paid compensation by the FSA, this government has ignored the legal request from the Ombudsman and says that when it said "guaranteed" people should have realised it did not mean "guaranteed" in the usual sense.
See what sort of people we are dealing with here?
And now this kick in the teeth for those who toped up their pension.
If you wanted to top up your pension you could use a thing called an AVC (Additional Voluntary Contribution) and these were of two types - a) an "In-House" version run by the Pension Scheme and b) a "Free Standing AVC" - totally separate from the in house scheme.
b) the Free Standing AVC was a regulated plan and was popular with employees that wanted more choice and sometimes with those that did not want to let their employer know that they were planning early retirement.
However, - the Regulator stated that the Occupational Scheme AVC (the "In-House one) was "guaranteed" and the Free Standing ones therefore were not.
As a consequence of this monumental lie, many an IFA was hauled over the coals and fined for setting up FS-AVC's on the basis that they did not make it clear that one was "guaranteed" and one was not.
And now this from one of the "Pinks" last week:-
"AVC QUANDARY FOR PENSION VICTIMS OVER BUYBACK DEAL
Paul McMillan - 18-Jan-2007
Victims of wound-up occupational pension schemes are being asked to sacrifice AVCs if they want to benefit from the Government's deemed buyback benefit and are finding it impossible to get advice on the subject.
The deemed buyback option was highlighted by pensions minister James Purnell last year allowing qualifying members to have their benefits reinstated into the state pension scheme if the scheme cannot afford to provide a minimum level of benefits.
But victims wanting the buyback option have been asked by HM Revenue & Customs to give up any AVCs accrued under the scheme, leaving them to decide which choice would be best.
Pension campaigner Ros Altmann says the situation is particularly galling, considering how many IFAs were fined for selling free-standing AVCs when this route could have saved victims from losing these contributions.
She suggests that AVC advisers could have a case for redress against the FSA.
Under the Pensions Act 1995, AVCs were supposed to be top priority if a scheme wound up but Altmann says the rules have not been legally tested.
HMRC has sent letters to qualifying victims giving them estimates, which it stresses are not guaranteed, of what they would receive under the buyback option and advises they seek independent financial advice.
One couple, Mr and Mrs Waldron, were given until this week to decide which option to follow but the Pensions Advisory Service and Citizens Advice Bureau could not advise them and they could not find an adviser willing to offer guidance. The couple could not get legal advice on what to do and have decided to take out annuities to avoid the risk of losing their AVCs.
Altmann says: "Any adviser fined for misselling must surely have a case for redress against the FSA, since none of the insecurity of these AVCs was factored into the calculation of compensation or penalties on advisers."
What a wunch of bankers.
Be very wary of putting all your "eggs" in one "pension basket".
Background
The FSA went round saying that Occupational schemes were "guaranteed" - they never were because the scheme was only as safe as the company/employer that ran the scheme. As many poor people who relied on their employers scheme are now finding out.
Despite the parliamentary ombudsman deciding that the government and the Regulator, the FSA was wrong to say this and that those affected should be paid compensation by the FSA, this government has ignored the legal request from the Ombudsman and says that when it said "guaranteed" people should have realised it did not mean "guaranteed" in the usual sense.
See what sort of people we are dealing with here?
And now this kick in the teeth for those who toped up their pension.
If you wanted to top up your pension you could use a thing called an AVC (Additional Voluntary Contribution) and these were of two types - a) an "In-House" version run by the Pension Scheme and b) a "Free Standing AVC" - totally separate from the in house scheme.
b) the Free Standing AVC was a regulated plan and was popular with employees that wanted more choice and sometimes with those that did not want to let their employer know that they were planning early retirement.
However, - the Regulator stated that the Occupational Scheme AVC (the "In-House one) was "guaranteed" and the Free Standing ones therefore were not.
As a consequence of this monumental lie, many an IFA was hauled over the coals and fined for setting up FS-AVC's on the basis that they did not make it clear that one was "guaranteed" and one was not.
And now this from one of the "Pinks" last week:-
"AVC QUANDARY FOR PENSION VICTIMS OVER BUYBACK DEAL
Paul McMillan - 18-Jan-2007
Victims of wound-up occupational pension schemes are being asked to sacrifice AVCs if they want to benefit from the Government's deemed buyback benefit and are finding it impossible to get advice on the subject.
The deemed buyback option was highlighted by pensions minister James Purnell last year allowing qualifying members to have their benefits reinstated into the state pension scheme if the scheme cannot afford to provide a minimum level of benefits.
But victims wanting the buyback option have been asked by HM Revenue & Customs to give up any AVCs accrued under the scheme, leaving them to decide which choice would be best.
Pension campaigner Ros Altmann says the situation is particularly galling, considering how many IFAs were fined for selling free-standing AVCs when this route could have saved victims from losing these contributions.
She suggests that AVC advisers could have a case for redress against the FSA.
Under the Pensions Act 1995, AVCs were supposed to be top priority if a scheme wound up but Altmann says the rules have not been legally tested.
HMRC has sent letters to qualifying victims giving them estimates, which it stresses are not guaranteed, of what they would receive under the buyback option and advises they seek independent financial advice.
One couple, Mr and Mrs Waldron, were given until this week to decide which option to follow but the Pensions Advisory Service and Citizens Advice Bureau could not advise them and they could not find an adviser willing to offer guidance. The couple could not get legal advice on what to do and have decided to take out annuities to avoid the risk of losing their AVCs.
Altmann says: "Any adviser fined for misselling must surely have a case for redress against the FSA, since none of the insecurity of these AVCs was factored into the calculation of compensation or penalties on advisers."
What a wunch of bankers.
Be very wary of putting all your "eggs" in one "pension basket".
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