Financial Ombudsman worried about pension switching

FOS is Worried About Rising Pension Switches

FOS is Worried About Rising Pension Switches

The Financial Ombudsman has voiced its concern over rising number of advisers telling their clients to switch pensions to unauthorised collective investment schemes.

The FOS has seen cases where people close to retirement were advised to move their pensions into such schemes only to find they are illiquid and can’t be withdrawn when they wish to retire and draw income, said Roy Milne, pensions ombudsman at FOS.

“In dealing with complaints about advice given we would be looking for advisers to cover why was the cost of switching justified, why have they sacrificed the benefits of the existing scheme, why is the investment suitable considering the investors attitude to risk?”, asked Mr. Milne.

Mr. Milne’s observation comes after the FOS revealed in its annual report 2010-11 that people had lodged complaints that there were delays in receiving advice on investments and setting up of annuities, and also being pushed towards SIPP by service providers.

However, not everybody seems to agree with Mr. Milne. “You have to look at every individual client’s circumstances to decide if a transfer was suitable. Just because someone is close to retirement does not mean they should not switch”, said Billy Mackay, marketing director at SIPP provider AJ Bell.

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