From the blog: The transfer market has been frantic with activity since the introduction of pension freedoms in 2015. Around £50bn has been cashed out of company pension schemes over the past two years, according to Mercer.
Now may be the time to add to your Lamborghini collection, but not if the alleged 'enemy of Brexit', Bank of England governor Mark Carney, is to have anything to do with it.
With one last swipe at British sovereignty, the EU looks set to increase our access to pensions transfers.
The UK will have to transpose the EU's Institutions for Occupational Retirement Provision Directive into law by January 13 2019.
Known better at dinner parties as IORP II, schemes will have to provide standardised annual benefit statements to members. This will undoubtedly make it easier to decide on whether to transfer out of one’s pension.
Interest rate rises and transfer value falls
Now may be the time to add to your Lamborghini collection, but not if the alleged 'enemy of Brexit', Bank of England governor Mark Carney, is to have anything to do with it.
The Monetary Policy Committee’s decision on Thursday to raise its base rate to 0.5 per cent from 0.25 per cent brought the nation to a standstill.
Transfer values had fallen in anticipation of the MPC’s 7-2 vote. According to Xafinity’s monthly transfer value index, values decreased from £240,000 in the first week of September to £230,000 by the end of the same month.
Sankar Mahalingham, head of defined benefit growth at Xafinity, said: “The driver for the fall was an increase in gilt yields over the month.”
As the eurocrats look to bolster our financial sovereignty, apparatchiks in our very own establishment are debating whether to take back control of our money.
The Work and Pensions Committee is currently investigating pension freedoms and pension savers' vulnerability to scams. On Wednesday, committee chair Frank Field mooted the idea of a minimum income requirement for over-55s looking to transfer out of their pensions.
Former pensions minister and Royal London’s director of policy Steve Webb told the hearing that a minimum income threshold “would kill pension freedoms”.
Following the rate rise, Webb urged savers considering transfers to “take impartial advice on the pros and cons of a transfer as a matter of urgency, as transfer values are unlikely to remain at today’s very high levels”.
Lords disagrees with government over guidance
Guidance over transfers may soon become de rigeur for those looking to take advantage of their pension freedoms.
On Tuesday, the government was defeated by 283 to 201 in the House of Lords over an amendment to the Financial Guidance and Claims bill, which intends to obtain a default level of guidance for anyone wanting to transfer out their pension.
The House of Commons will now debate the merits of the amendment. Thus far, it has rejected every amendment to the bill.
For now, the consensus broadly remains that despite recently high transfer values, most savers are better off remaining in their schemes.
In June, Christopher Woolard, executive director of strategy and competition at the Financial Conduct Authority, said: “Defined benefit pensions, and other safeguarded benefits such as guarantees, are valuable so most consumers will be best advised to keep them."
It is time for us to rediscover our faith in experts. It is probably time for savers to give back control.
This article has been changed since original publication to accurately reflect the source of the statement that £50bn have been withdrawn from pensions
