Pension providers warn of delays for the pension bank account

Pension providers warn of delays for the pension bank account

Anyone that was hoping to take advantage of UFPLS, or the "pension bank account", in April may be in for disappointment, as providers may not be ready to provide such flexibility.

Writing for the Telegraph, Katie Morley explains that "Britain’s biggest pension funds have warned the Treasury that they will be unable to implement the reforms in time" because "the Government has given 'insufficient' detail to companies, who say customers face a 12-month wait."

This announcement is unlikely to be a major shock for many people, as the pension bank account was only announced last month. That doesn't leave much time for the industry to implement the changes, especially if firm details have not been provided by the government.

However, the lack of details may turn out to not be a problem; the "pension bank account" was intended to be announced in next month's Autumn Statement, but the chancellor announced it early at the Conservative Conference. It's therefore possible that the next announcement will include the finer details the pension providers need to implement the flexibilities.

If that doesn't happen, though, or providers need more time to adjust their systems accordingly, then a number of retirees could be in a difficult position of knowing the option they want to take but being unable to do so. This could force them to crystallise their fund either with income drawdown or an annuity if they don't have available funds to support them for the year until the withdrawal flexibilities are available.

To keep things in perspective, the government stated earlier this year that the flexibilities will not be mandatory for firms to offer, and a number of providers have stated they won't be implementing them by April. Even under current rules there is disparity between pension providers - some do not offer drawdown, and clients need to transfer to a different scheme in order to access it. The same will be true after April: if a client's provider doesn't offer the option they want, they can find a firm that does and consider transferring across.

The Treasury is denying claims that the information provided to providers has been too vague, and argues that "[m]any of the questions raised have already been answered by command papers, draft regulations and legislation that is being considered by Parliament."

Regardless of what information has been provided, companies will have final say in whether they want to adopt certain changes or not, so anyone contemplating a particular option should talk to their provider to find out what they will be offering from April. If the favourite option isn't available, there may be an alternative available, such as phased drawdown if UFPLS won't be possible.

Will you transfer to a new provider if the latest flexibility isn't available with your current one? Let us know with a comment below.

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The details provided in this article are for general information only and are in no way deemed to be financial advice. All of the material is correct as of the publication date, but could be out-of-date by the time you read the article. For our latest information and news, please see our articles section:

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