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    Savers struggle to hire financial advisers to cash in their pensions

    Why thousands can’t cash in their pension: Savers struggle to hire financial advisers after watchdog cracks down on transfers

    • Savers can’t unlock pensions after Financial Conduct Authority crackdown 
    • Watchdog feared savers were too often moving money out of valuable schemes   
    • Insurance costs for financial advisers covering mis-selling claims have soared
    • Savers left unable to find anyone to unlock pensions due to shortage of advisers

    All Don Forsyth wants to do is unlock the money tied up in an old pension he had forgotten about.

    But because the pension comes with valuable guarantees and is worth more than £30,000, he needs to pay a financial adviser to sign it off.

    Yet the trouble is, the 61-year-old cannot find one willing to do it — despite asking 30 over the past two months. 

    ‘It’s my money’: Don Forsyth is unable to unlock his savings because he can’t find a financial adviser who’s willing to help

    Don is one of potentially hundreds of thousands of savers now denied the freedom to unlock their pensions after a crackdown on transfers by regulator the Financial Conduct Authority. 

    The clampdown comes after fears savers were too often moving money out of valuable pension schemes. 

    A scandal at British Steel saw some workers lose hundreds of thousands of pounds each after being convinced to move money out of the company pension scheme.

    As a result, the price of the insurance that covers advisers for mis-selling claims is soaring — causing advisers to turn their back on transfers, and leaving savers unable to find anyone to unlock their pensions. 

    The pension freedoms introduced five years ago were supposed to let savers over 55 do what they want with their retirement cash. 

    But savers are now being denied access to their money because pulling out of final salary pension schemes, and those with guaranteed income rates, might not be in their best interests.

    The law dictates that transfers from ‘defined benefit’ pension pots worth more than £30,000 have to be approved by an adviser first to stop savers short-changing themselves. 

    But now indemnity insurers are refusing to cover advisers for the pension transfers, or hiking premiums to unaffordable rates.

    As a result, advisers are refusing to help with the transfers outright, or turning away savers with meagre pots that are not worth their while.

    Retired advertising executive Don has been told his pension — which comes with a guaranteed annuity rate – is worth £34,000. But provider Phoenix Life will only hand over the cash if an adviser approves it.

    The law dictates that transfers from 'defined benefit' pension pots worth more than £30,000 have to be approved by an adviser first to stop savers short-changing themselves

    The law dictates that transfers from ‘defined benefit’ pension pots worth more than £30,000 have to be approved by an adviser first to stop savers short-changing themselves 

    Without an adviser’s OK, Don is restricted to using the money to buy an annuity paying £1,650 a year for the rest of his life – something he says he doesn’t need because he has ample savings for retirement.

    Don says: ‘It is disgraceful. They have made it as difficult as possible. It’s my money. I should be able to do what I want with it. 

    They treat you like an idiot. The whole thing is wrong. It doesn’t tie in with what the Government intended with these so-called pension freedoms.’

    Married dad-of-three Don, from Chislehurst in South-East London, also says advice directory Unbiased.co.uk, which has 3,500 pension transfer specialists on its books, was unable to find him one willing to help. 

    A Phoenix Life spokesman says: ‘I’m afraid there is no way around the advice requirement imposed by legislation for this client’s wishes.’

    A poll of financial advisers by the Personal Finance Society (PFS) for Money Mail found that the cost of indemnity insurance had risen for 95 per cent of them. 

    More than one in three said that the price had risen by more than 50 per cent this year, while half said they had passed the extra cost onto their clients.

    PFS chief executive Keith Richards says the availability of advice for defined benefit pension transfers was ‘being driven into extinction’. 

    He says: ‘A growing number of financial advisers have told me they can’t get insured to advise clients. As a result they can no longer help consumers make the most of pension freedoms.’

    Adviser Jeremy Glynne-Jones says the FCA’s crackdown was behind the soaring insurance bills that have caused many of his colleagues to flee the market. 

    He says his firm’s insurance costs rose from £15,000 to £75,000 last year, and the insurer refused to cover final salary pension transfers. He says: ‘It is the first time in my career I have been told I cannot give advice. It’s ridiculous.

    ‘The FCA is basically stopping people doing anything with their pensions through the back-door route.’

    Former pensions minister Sir Steve Webb says the £30,000 threshold is ‘too cautious’. He says: ‘These are valuable guarantees but I just think the threshold is too low.’

    Simon Harrington, of trade body the Personal Investment Management and Financial Advice Association, explains assessing the suitability of a transfer took many hours of work. 

    He says that, coupled with rising costs, meant transfers of pension pots valued at little over £30,000 were often not worthwhile for advisers. 

    He says: ‘It does not represent a valuable exercise for many advisers, given the potential for redress and the regulatory and commercial barriers in place.’

    An FCA spokesman says: ‘We have seen too many cases of consumers being advised to transfer out of a (defined benefit) pension when this was not suitable; that has affected the price of the indemnity insurance that advisers must hold.’

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