Ever since the pension freedom reforms of 2015, financial watchdogs have tried to persuade members of final-salary pension schemes not to transfer their savings to alternative plans. While transferring could unlock more flexible pension arrangements, these are hardly likely to be worth giving up guaranteed retirement income for.
Until now, the choice has been for savers to make. But amid the Covid-19 panic, the Pensions Regulator has introduced emergency measures. Some 5,500 defined benefit pension schemes covering more than six million members now have the right to suspend all transfers and requests for transfer quotes for up to three months. Transfer requests put in before the regulator’s announcement can also be put on hold.
The regulator says its chief concern is that volatility in financial markets is making it difficult for pension schemes to calculate transfer values – how much they should pay out to members moving on. Some schemes might pay too much, leaving them short of assets for remaining members.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The measure is also designed to protect savers themselves. One fear is that savers will be targeted by scammers and rogue advisers who see Covid-19 as a chance to persuade people to make decisions they will later regret.
That makes sense, but will frustrate some savers. Growing numbers are worried their employer will not survive the crisis and want to move their benefits before the industry lifeboat is called in. Others are facing financial pressure because of Covid-19 and may be able to cash in their pension earlier if they are over 55 and move the money elsewhere. Still, even if you’re in one of these groups, tread very carefully – a transfer may still be far from ideal.
Dashboard hopes dashed
Two important initiatives designed to make pension savers’ lives easier have fallen victim to the Covid-19 crisis. The pension dashboard, an online tool allowing savers to track all their different pension schemes through one simple portal, now looks set to be delayed once again. The dashboard was held up by Brexit and the general election, but had been due to go live this year. Now, however, the industry group overseeing the project has effectively put it on hold.
Meanwhile, the Financial Conduct Authority, the City regulator, is postponing its pension investment pathways initiative from August until next February. The idea, reflecting concern that some pension savers are making inappropriate investment choices, is to provide default investment options based on how people plan to use their pension schemes.
-
Bitcoin hits new heights - is now a good time to invest?The value of Bitcoin has surged to a 20-month high. Why is Bitcoin rising and is now a good time to invest?
-
Gold hits record high - could it soar higher next year?
The yellow metal has hit a new all-time high. We look at market expectations for 2024, whether investors should sell and take profits, and how to invest in gold.
-
NatWest-owned Ulster bank boosts easy access savings rate to 5.2%
Rates on easy access savings accounts have hit over 5%, with Ulster Bank now giving savers the chance to earn 5.2% on their cash savings. We have all the details.
-
Moneybox raises market-leading cash ISA to 5%
Savings and investing app MoneyBox has boosted the rate on its cash ISA again, hiking it from 4.75% to 5% making it one of top rates. We have all the details.
-
October NS&I Premium Bonds winners - check now to see what you won
NS&I Premium Bonds holders can check now to see if they have won a prize this month. We explain how to check your premium bonds
-
October’s NS&I Premium Bond winners revealed - have you scooped £1 million?
Two lucky NS&I Premium Bond winners are now millionaires this October. Find out here you are one of them
-
The best packaged bank accounts
Advice Packaged bank accounts can offer great value with useful additional perks – but get it wrong and you could be out of pocket
-
Energy bills to fall 7% under new price cap
Energy bills could fall by an average 7% from October under the new Energy Price cap announced today. We explain what the new cap mean for you and when it will come into play
-
Bank of Baroda closes doors to UK retail banking
After almost 70 years of operating in the UK, one of India’s largest bank is shutting up shop in the UK retail banking market. We explain everything you need to know if you have savings or a current account with Bank of Baroda
-
The best options to earn cashback on spending
From credit cards and current accounts to cashback websites, there are plenty of ways to earn cashback on the money you spend.
