'Pensions abuse will cost millions': SIB to publish study showing scale of ill-advised transfers before Christmas
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.THE SECURITIES and Investments Board, the senior financial regulator, believes that the cost of compensating many tens of thousands of workers who ill-advisedly transferred their occupational pension benefits to insurance companies will run into hundreds of millions of pounds, but will fall well short of pounds 1bn.
The SIB said yesterday that it intended to publish before Christmas the results of a pilot study that shows the scale of the problem. The study, by KPMG Peat Marwick, suggests that a large proportion, believed to be about a third, of the 500,000 transfers into personal pensions should not have been made.
John Young, the SIB's chief executive, and other senior regulators will form a steering group that will draw up recommendations by the end of February to prevent future abuses. They are likely to include tougher restrictions on pensions advisers.
The SIB will then produce proposals for providing restitution to disadvantaged investors in July. Andrew Large, the SIB chairman, said: 'Those who may have transferred their pension provision on the basis of wrong advice will not be harmed by waiting for reliable solutions to emerge. Pension provision is a long- term business and they need take no precipitate action at present.'
The Consumers' Association was critical of the SIB's steering group for comprising the regulators who had failed to prevent past abuses, and of a high-powered advisory committee made up of others with vested interests, such as Allan Bridgewater of Norwich Union, Sir Kenneth Clucas of the regulator Fimbra, and Sir Nicholas Goodison of TSB Group.
The association said that it was anxious that the SIB's review should not become an industry whitewash. John Belshon, its chief executive, said: 'The consumer has suffered too much for too long from the financial services industry's failure to police itself. This, the latest in a long line of scandals, is likely to dwarf the others in the scale and the range of the damage done to individuals.'
Life insurers have taken about pounds 7bn in pension transfer business. The Association of British Insurers said that it supported the SIB review and had encouraged such an initiative. It said that many insurers had already taken action to remedy problems.
----------------------------------------------------------------- PENSION TRANSFER BUSINESS ----------------------------------------------------------------- The top 12 companies in the year to March 1993 ----------------------------------------------------------------- Total Section 32 transfers buyout business Standard Life pounds 318m pounds 86.3m Pearl Assurance pounds 243.2m None NPI pounds 187.2m pounds 94.7m Clerical Medical pounds 181.2m pounds 88.3m Legal & General pounds 180.2m pounds 31.5m Scottish Amicable pounds 160m None TSB Pensions pounds 137.4m None Allied Dunbar pounds 128.2m None Norwich Union pounds 127.3m pounds 58.9m Prudential pounds 118.1m pounds 64.8m Sun Life pounds 114.5m pounds 24.1m Equitable Life pounds 108.2m pounds 9m Total includes section 32 buyout business. ----------------------------------------------------------------- Source: Pensions Management -----------------------------------------------------------------
View from City Road, page 36
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments