Flexible pensions cash may be a major contributor to the rise in savings deposits – rather than a rise in consumers saving more, new research has suggested.

Retirees withdrawing cash appeared to be acting with caution due to market volatility and were found to be using savings accounts as a “haven”, according to the latest statistics. 



HMRC revealed that both the volume and value of flexible payments from pensions has hit a new high.

Between April and June this year, £2.75bn was withdrawn from pensions flexibly, with 760,000 payments made.

Over the same quarter, statistics from the Bank of England noted £7.5bn was deposited into accounts that are accessible without penalty, which includes easy access accounts.

According to the latest research by Moneyfacts.co.uk, savers who have waited until now to open an account may have missed the boat on the most lucrative easy access rates, as they are now on the decline. 



Moneyfacts says retirees who want frequent access to use their savings pot as a source of income will “need to be mindful that the best easy access deals can apply withdrawal restrictions or require savers to open the account online”.

Savers will also find that the market average rate of 0.64% is less than the Bank of England base rate, so there are still many accounts to avoid due to poor returns.

Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Retirees may be withdrawing cash from their pensions for various reasons, either to plug a debt gap, boost disposable income or even to reinvest.

“There are signs that the cash could be going into easy access accounts, away from stock market volatility and within easy reach. In recent months, several providers have cut their easy access rates, plus some of the top deals include withdrawal restrictions.

“The downside to choosing an easy access account is the return, which is variable and may well drop should we see a base rate cut before the year is out.

“As the average easy access rate stands at just 0.64%, it’s clear to see that there are much worse rates out there for savers than can be found in the top rate tables.

“Indeed, the Flexible Saver from HSBC pays a disappointing 0.15% – 10 times less than the top rate in the market today on offer from Virgin Money, which pays a rate of 1.50% on its Double Take E-Saver.

“It is slightly worrying to find such a large rise to both the volume and value of pension cash withdrawals, hitting a new record since pension freedoms were introduced. If retirees take too much cash out of their pensions from the age of 55, they may end up with little provision for the future, which they are unlikely to be able to recoup. 

“Seeking independent financial advice, both when withdrawing cash and choosing a product in which to invest, is essential during a period of economic uncertainty.

“Taking out an easy access account may be an easy choice, but it doesn’t necessarily mean it’s the right one.” 

SIPPs and SSAS firm Talbot and Muir has warned that a number of SSAS arrangements face “significant costs and delays” on transfers to a more suitable vehicle, such as a SIPP.

SSAS arrangements continue to be popular with advisers and their clients but at times it becomes necessary to transfer to a SIPP, the firm says. 

This may be due to the sale of the sponsoring employer or other personal reasons. 

Talbot and Muir says many who decide to transfer their SSAS benefits but wish to retain certain assets such as property are faced with unjustified charges and administrative delays.

While SSAS’s are not regulated by the FCA the firm said it “seems unfair” clients are not protected by the FCA’s fair treatment of clients Outcome 6, whereby consumers do not face unreasonable post-sale barriers imposed by firms to change product or provider.
 
David Bonneywell, director, Talbot and Muir, said: “We are seeing a marked increase in the enquiries received from IFA’s in respect of SSAS schemes that wish to move to a SIPP. 

“One reason for the contact is that these schemes are facing very high costs to transfer and they are looking to see if there are ways to minimise this. 

“Current administrators appear to be unhelpful with regards to the transfer and are putting restrictive internal red tape in place, in particular when a property is involved. 
 
“A number of advisers are now recommending that the SSAS changes administrator and professional trustee, and then effects a transfer to a SIPP in a cost efficient and timely manner.”

Royal London has warned against a “drastic” proposal to raise the State Pension age to 75.

The Centre for Social Justice, a think tank chaired by former Work and Pensions Secretary and ex-Tory leader Iain Duncan Smith, recently published a report which recommended the change.

The rationale for upping the pension age to 75 by 2035 was cited as “removing barriers” for older employees and “health and wellbeing concerns”.

The report’s conclusion read: “ Removing barriers for older people to remain in work has the potential to contribute greatly to the health of individuals and the affordability of public services.

“Therefore, this paper argues for significant improvements in the support for older workers.

“This includes improved healthcare support, increased access to flexible working, better opportunities for training, an employer-led Mid-Life MOT and the implementation of an ‘Age Confident’ scheme.

“As we prepare for the future, we must prioritise increasing the opportunity to work for this demographic to reduce involuntary worklessness.

“For the vulnerable and marginalised, a job offers the first step away from state dependence, social marginalisation and personal destitution.”

In addition, provided that this support is in place, we propose an increase in the State Pension Age to 75 by 2035.

“While this might seem contrary to a long-standing compassionate attitude to an older generation that have paid their way in the world and deserve to be looked after, we do not believe it should be.

“Working longer has the potential to improve health and wellbeing, increase retirement savings and ensure the full functioning of public services for all. 

But Royal London’s Helen Morrissey cautioned against the approach.

The pension specialist said: “While such proposals will undoubtedly save money, raising state pension age so quickly will cause huge issues for many retirees who will not have been given adequate time to prepare.

“We need to give careful thought to what kind of jobs people in their 70s are able to do and while some people will be able to work on for longer others simply won’t be able to.

“These people will face severe financial hardship if they have not saved enough into a pension to cover the years between leaving work and claiming state pension.”

She added: “The Government needs to think carefully before taking such drastic action.”

The Financial Services Compensation Scheme has opened the door to claims against a SIPP firm which was dissolved more than 10 years ago.

The FSCS says it is now accepting claims again North Star SIPP LLP which was dissolved on 9 June 2009. 

In January 2018, the FSCS declared three SIPP operators, Brooklands Trustees Ltd, Stadia Trustees Ltd and Montpelier Pension Administration Services Ltd in default. Since then FSCS has received a number of claims against these and other SIPP operators, it says.

The compensation body says it is aware that SIPP operator due diligence has been an industry ‘hot topic’ in recent years and FSCS is aware that there are a number of pending civil claims in the High Court against various SIPP operators in respect of alleged due diligence failings.

The FSCS anticipates that claims submitted against North Star will relate to the SIPP operator's due diligence obligations in allowing customers to make specific investments under their pensions.

In a statement the FSCS said: “We're aware that North Star customers may have been advised by independent financial advisers to transfer existing pensions into a North Star SIPP. Following the pension transfer, customers had their pension funds placed in high risk, non-standard investments, many of which have become illiquid.”

The FSCS says it has has already assessed and paid a number of claims made against IFAs already declared in default by the FSCS in relation to advice customers received to transfer their pension into a North Star SIPP.

The joint administrators of GPC SIPP have concluded the sale of the business to Hartley Pensions following a period of marketing.

The deal, which was completed on Monday, included the effective transfer of the SIPPs and SSASs held via the trustee company, Guardian Pension Trustees Limited.

Adam Stephens and Henry Shinners of Smith & Williamson LLP were appointed as joint administrators of GPC on June 11.

Hartley is an established SSAS provider with over 35 years’ experience in the financial services industry, opening its first SIPP in 2001.

It is part of the Wilton Group and manages more than £1 billion of clients’ assets.

Adam Stephens, lead administrator, said: “We are pleased to confirm the sale of the business to Hartley, which will provide continuity of service to GPC’s clients.

“We recognise that the insolvency of GPC may have been unsettling to clients”.

Weightmans LLP acted as legal advisers to the joint administrators on the sale.

James Moore, restructuring and insolvency partner at Weightmans LLP, led the team along with Natasha Atkinson (R&I Partner) and pensions partner Mark Poulston.

The joint administrators confirmed that all staff will transfer across to Hartley, which, they said, should assist in ensuring that clients will experience minimum disruption in the transfer process.

The joint administrators and Hartley “do not anticipate that there will be any interruption to the services previously provided by GPC”.

GPC specialised in the provision of technical and administration services to Guardian Pension Trustees Limited which acted as the corporate trustee of SIPPs and SASSs.

It administered around 3,200 SIPPs and 50 SSASs, holding over 8,000 property assets, and a total investment value of around £130m.

The joint administrators said clients will be contacted “in the coming days” with information about their pensions.

The retirement outcomes review continues to cause fun and games in the world of pensions. Particularly for those with more complex pension products.

The FCA and The Pensions Regulator (TPR) are joining forces again this summer to warn the public about fraudsters targeting people’s retirement savings - as they revealed up to five million were at risk from scammers. 

The alert came as new research suggested that 42% of pension savers, which would equate over five million people across the UK, could be at risk of falling for at least one of six common tactics used by pension scammers.

The likelihood of being drawn into one or more scams increased to 60% among those who said they were actively looking for ways to boost their retirement income.

Pension cold-calls, free pension reviews, claims of guaranteed high returns, exotic investments, time-limited offers and early access to cash before the age of 55 could all tempt savers into risking their retirement income, the regulators said.

The research also found that those who considered themselves smart or financially savvy were just as likely to be persuaded by these tactics as anyone else.

Pension savers were tempted by offers of high returns in investments such as overseas property, renewable energy bonds, forestry, storage units or biofuels.

However, exotic or unusual investments were described as “high-risk and unlikely to be suitable for pension savings”.

Nearly a quarter (23%) of the 45 to 65-year-olds questioned said they would be likely to pursue these exotic opportunities if offered to them.

Helping savers to access their pensions early also proved to be a persuasive scam tactic.

One in six (17%) 45 to 54-year-old pension savers said they would be interested in an offer from a company that claimed it could help them get early access to their pension.

However, accessing pension cash before 55 is likely to result in a large tax bill for the saver.

23% of all those surveyed said they would talk with a cold-caller that wanted to discuss their pension plans, despite the Government’s ban on pension cold-calls this January.

Nearly a quarter said they would ask for website details, request further information or find out what they were offering, even if the call came out of the blue.

Victims of pension fraud reported in 2018 that they had lost an average of £82,000.

The regulators issued a statement that read: “Pension fraud can be devastating, as victims can lose their life savings and be left facing retirement with limited income.

“As a result, the regulators are joining forces to urge pension savers to be ScamSmart and to check who they are dealing with before making any decision on their pension.

“Last year’s ScamSmart campaign resulted in more than 3,705 people being warned about unauthorised firms.

“This year’s campaign is currently running on TV, radio and online.”

Guy Opperman MP, Minister for Pensions and Financial Inclusion, said: “Pensions are one of the largest and most important investments we’ll ever make, and robbing someone of their retirement is nothing short of despicable.”

“We know we can beat these callous crooks, because getting the message out there does work.

“Last year’s pension scams awareness campaign prevented hundreds of people from losing as much as £34 million, and I’m backing this year’s effort to be bigger and better as we build a generation of savvy savers.”

Mark Steward, executive director of enforcement and market oversight at the FCA, said: “It doesn’t matter the size of your pension pot – scammers are after your savings.

“Get to know the warning signs, and before making any decision about your pension, be ScamSmart and check you are dealing with an FCA authorised firm.”

Nicola Parish, executive director of frontline regulation at TPR, said: “Scammers don’t care who they prey on or how many lives they wreck.

“If you ignore the warning signs you put yourself at risk of losing your savings.

“Victims are left devastated by what has happened to them.

“Make sure neither you nor any of your loved ones have to go through that ordeal.”