Savers are vulnerable to making pension changes they will regret amid the coronavirus crisis, according to The Pensions Regulator (TPR) executive director of regulatory policy, analysis and advice, David Fairs.
Fairs pointed out that many people are likely to be re-examining their finances, possibly deciding to sacrifice retirement savings to deal with looming bills and other financial pressures.
Fairs commented: “The uncertainty this insidious virus has brought, together with the unprecedented restrictions to slow its spread, presents new challenges we’re all adapting to. What’s not new, is our resolute support for savers and the people who run pension schemes. In fact, Covid-19 makes this even more important.”
He emphasised that TPR’s focus was on savers, not just regulation, administration and enforcement, and called on trustees to follow the right processes if asked to make a transfer and make sure they speak with a Financial Conduct Authority (FCA) regulated adviser.
Defined benefit (DB) members could want to transfer due to concerns that their employer will struggle to keep up with contributions, while defined contribution savers might have already seen their pensions transferred into assets less exposed to market volatility.
However, he noted that those in DB schemes should understand that transferring to a different type of arrangement was “unlikely” to be in their best interest.
“We want those paying into a workplace pension, and who have a long time to retirement, to understand that, historically, financial markets have recovered from shocks. The current volatility might have no impact on their ultimate retirement benefit,” said Fairs.
He also warned that scammers are more likely to prey on savers during times of stress, adding that this was likely to happen through offers to conduct pension reviews or provide superior return.
Concerned savers might benefit from advice on staying safe offered by TPR, the FCA and the Money and Pensions Service, or from speaking to The Pensions Advisory Service or Pension Wise.
Fairs concluded: “We might be physically separated from each other, but we don’t have to be isolated. The right advice is still available. We must make sure that message isn’t lost in the panic.”
— to www.pensionsage.com