You are here: Home - Saving & Banking - News -

‘No pensions chicanery went on here’ says FSA

Written by:

There is no evidence of wide mis-selling of policies used to opt out of the State Second Pension (S2P), according to the Financial Services Authority (FSA).

The FSA has been investigating the sale of policies known as Appropriate Personal Pensions (APPs) since 2005 and it has ruled that many of the “contracted out” savers had made the wrong decision to buy an APP.

But the FSA has also acknowledged that the majority of the sales adequately met the regulatory standards of the time.

The chance for people to leave the S2P, and its precursor Serps, was Tory policy in the late ’80s and early ’90s, when the party wanted to expand private pension saving.

In return for opting out of the S2P, the Government pays part of an individual’s National Insurance contributions into an APP, which is then invested to turn into a lump sum for retirement.

Of the eight million APPs that were sold, about 120,000 – or 1.5% – were purchased by people too old to benefit from the product.

However, the FSA found that though some customers may have been wrongly advised to opt out of their S2P, many still had good reasons to do so.

“Some consumers may have wanted to leave their pension savings to their dependants if they died before retirement,” said an FSA spokesperson. “Or they may have preferred control over their investments rather than relying on Government pension policy.”

The FSA’s conclusion was welcomed by the Association of British Insurers.


Tag Box




Financial fitness

There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Are you a first-time buyer looking for a mortgage?

Look no further, get the help you need by searching for your perfect mortgage

Which ISA is right for you? A round up of the six products available in 2017

From cash to innovative finance to lifetime, here's our guide to the ISA products available to savers this yea...

Guide to buy-to-let tax changes

In late 2015, former Chancellor George Osborne announced a range of  tax measures aimed at landlords, which t...

A guide to switching energy provider

All you need to know about switching from one energy supplier to another.

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

Five fund tips for a 0.25% interest rate environment

With interest rates stuck at a record low 0.25% and expectations rates could fall to close to zero, here are ...

Protecting family wealth: 10 tips for cutting inheritance tax

Inheritance tax - sometimes known as 'death tax' - can cause even more heartache for bereaved families. But th...

Travel insurance: Five tips to ensure a successful claim

Ahead of your summer holiday, it’s important to make sure you have the right level of travel cover or you co...

Investing your money

Alliance Trust Plc gives you smart insight into how to invest your money

Money Tips of the Week

Read previous post:
EDITOR’S BLOG: Your money – poured down the drain

I took a stroll through the heartlands of British Government the other evening, and very affecting it was too.