Budget - good or bad for pensions?

Whilst there was no real tinkering with pension and savings in the budget, the poor outlook for economic growth will create pressure on people’s pockets. Whether to cover outgoings or a need for comfort spending, people may well turn to their pensions for the answer.

This means that Pensions Freedoms generally, and DB transfers in particular, are likely to see an uptick in activity. Of course, drawing money from a pension pot to spend now, at the expense of income in the future, is unlikely to be considered suitable financial advice. This will only serve to focus even more attention on the whole area of suitability and, because of the inevitable imbalance between a customer’s desires and their long-term needs, a potential increase in insistent clients. 

The advice industry continues to await the FCA’s response to CP17/16 and our expectation is that not only will we have to wait some time but that the eventual outcome will be unsatisfactory. On one end of the spectrum the FCA could erect even greater barriers against transfers which would both be unpopular with the public and mean many people couldn’t benefit from some of the real advantages available through transfer. 

The sensible middle ground would be clarity as to what advisers may deem suitable and not suitable, and further clarity of how to deal with those clients who, having received advice against, remain insistent that they want to transfer and take money early.