Pensions freedom not available to all

David Hill INLT 45-099-PSB
David Hill INLT 45-099-PSB

Much has been written about the new pension rules that unlock pension funds to be spent in whichever way the individual wishes. In reality, for many people it is proving to be more difficult than they had imagined.

In reality, for many people it is proving to be more difficult than they imagined.

Not all of the pension companies offer the flexibility that the new rules allow.

This means that pension holders must transfer these pensions to an alternative pension company to access the new freedoms.

The Government has put rules in place to safeguard investors who have pensions with valuable guarantees by making it compulsory that they receive advice from a pensions specialist to sanction the move.

Problems can occur when the pensions specialist doesn’t recommend a transfer to the new style of pensions because the guarantees that would be lost on transfer are too valuable.

We had experience of this last week when we were asked to sanction a transfer of a public sector final salary scheme to a drawdown pension that would enable the holder to cash it in to buy a property.

We of course refused to allow the transfer, as leaving a guaranteed final salary scheme is very rarely going to be good advice, unless the individual is in very poor health and they want to increase their death benefits.

We are still coming across individuals who have been pressurised into transferring their pension into very high-risk, unregulated investments that tie up their capital, so they can’t take advantage of the freedoms. In the worst cases we have seen people lose their entire pension fund.

As you approach retirement, it is much more important to focus on not losing the money than it is to make massive gains. Unfortunately, greed is a powerful driver and the cold-calling salesmen can be very persuasive in their arguments about the “fantastic” new investment they want you to put all your money into.

There are plenty of fully-regulated pension advisers out there who can give you detailed, specific, face-to-face advice, so don’t fall prey to the con men and remember, if it sounds to good to be true, it probably is.

l David Hill is a Chartered Financial Planner and Independent Investment Adviser at Hills Financial Planning, 15 Agnew Street, Larne. He can be contacted on 028 28276814, email or see