There has been a lot of talk in the press lately about the
uptake in pension transfer activity, and the risk that this could
potentially lead to the country's next mis-selling scandal.
The latest research shows more than 500,000 people have cashed
in a total of £9.2 billion from their pension pots in the two years
since pension freedom rules were launched, with home improvements,
cars and holidays the three most common expenditure items.
Over the past couple of weeks I have spoken to a number of
national newspaper personal finance journalists about the risks of
cashing in a secure income, particularly given the recent rise in
life expectancies and the extended period of time that people can
expect to live in retirement.
With the prospects of market uncertainty and volatility on the
horizon, the added perception of capital erosion may spark claims
There has never been a more important time therefore for the
profession to be more alert, robust and rigorous in managing
understanding and expectations, coupled with clear risk warnings
The latest Office of National Statistics (ONS) figures reveal
that Britons now have a higher life expectancy than ever before.
Men are living an average of eight years longer and women almost
four years more than just 25 years ago, with life expectancies
reaching 86 and 88 respectively.
I made it clear in my discussions with the consumer press that
in many cases financial advisers are now typically and prudently
anticipating life-spans of up to 100 years when preparing their
planning forecasts, and additionally taking into consideration
other factors such as the potential impact of care costs:
The Express: Pensioners are warned over £9.2 billion retirement
Mail on Sunday: Start saving early to save yourself from a Grimm
The Telegraph: Financial advisers assume 'new normal' where clients
live to 100
At the same time however, we are seeing unprecedented levels of
retirees accessing their pension pots to finance short term
objectives such as holidays, cars and home improvements, with often
little understanding or consideration of the longer term
The FCA has raised the flag on pension transfers, reminding
advisers earlier this year of what it expects when transfers are
It is timely for all financial advisers to be reminded of their
responsibilities with regard to pension transfers and I'd urge you
to read our latest good practice guide, which offers clarification
on some important transfer issues:
Practice Guide: Pension transfers from defined benefit to defined
Financial Advice Market Review - one year
Last month represented a significant milestone for the financial
advice sector, having reached the one-year anniversary of the
Financial Advice Market Review (FAMR) report.
To mark the event, the government and FCA released a progress
report, updating the market on the status of the report's 28
It showed 10 recommendations were completed, 11 were "on track"
and seven had consultations underway - an impressive achievement
given the recent period of political instability.
We give due recognition and credit to the progress FAMR has made
on increasing support for employers who want to facilitate
workplace advice, incentivising consumer engagement with a
financial adviser and establishing a clearer definition of advice
for regulated firms.
These are practical steps in the right direction. But alone they
will not have the impact required to truly address the advice gap
and better protect the public's long-term best interests.
We will continue to work with the government and regulator in
the months ahead, to ensure that together we achieve the critical
reforms that the sector and consumers deserve.
On Friday, I will have the pleasure of hosting the newest group
of PFS graduates at a ceremony to be hosted in our Great Hall in
We will welcome 433 new Chartered, Associate and Fellow's to our
ranks, and I look forward to acknowledging and celebrating their
success with family and friends who will also be present.
These occasions remind us all of the professional evolution that
has taken place within the personal finance sector in recent years,
and I congratulate all members of the society for the role you are
playing in the evolution of the profession - Thank You!
About the Blog
In this blog Personal Finance Society CEO Keith Richards will be
keeping you up-to-date with all the Personal Finance Society news,
projects and initiatives that we have in the works.
Read past editions of the blog »