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BeeHive  >  BeeLines  >  Battle of the Blogs Revisited

Battle of the Blogs Revisited

I was looking through the January issue of the Financial Services Authorityís Newsletter for Financial Advisers when I noticed the reference made to means-tested benefits and the giving of advice.I more than noticed it really.It sort of jumped off the page at me in fact.

Thinking about it I thought it was so important that I ought to ask James Purnell, the current Pensions Minister, what he thought about it too.I know heís interested in this sort of thing.If 2006 is not a complete blur to you already you may remember the minister and I had a number of useful exchanges about means-testing and the suitability of saving towards the end of last year.That was around the time that the Government was unveiling its new idea to auto-enrol millions of people into pension saving through the latest in a long line of the next big pension ideas, the Personal Account.

Anyway, Iíve posted the following question on the Department for Work and Pensions (DWP) website this afternoon and Iíll let you know if I get any response:


Sorry to bring it all up again, but Iíve promised the readers of my BeeHive website that Iíd ask you about the level of care that you expect to be taken when you eventually come to auto-enrol so many people into the proposed Personal Accounts that you were going on about last year.

The reason for bringing it up now is that Iíve just been reading the FSAís newsletter to financial advisers and it contains the following:

Means tested state benefits

Factors that impact on the advice you give will vary from product to product and customer to customer.However, one factor that you may want to consider taking into account is whether a product will affect a customerís entitlement for means tested state benefits.Principle 9 imposes a broad requirement for a firm to take reasonable care to ensure the suitability of its advice.

And principle 7 requires a firm to pay due regard to the information needs of its clients.You may wish to consider the impact of your financial advice on means tested benefits in communicating with some of your customers.

Among the failings we have seen in this area are a firm that recommended a low premium pension to someone in their late 50ís with no previous pension provision.Another firm recommended a lifetime mortgage to a customer without considering the impact on the pension credit they were receiving.

Among the good practices we have seen are a firm that ensures all customers who are in receipt of child and family tax credits are aware of the different implications of achieving capital growth with their savings and investments.

You and your customers may want to look at the information available on the internet on websites such as†DWP and to understand the available benefits and tax credits.

Having read that I thought Iíd ask you a few direct questions today (at the beginning of 2007) about the care that will be taken as people are auto-enrolled into pension saving by the legislation you are proposing if you donít mind.

  1. Will those auto-enrolled into saving in Personal Accounts be advised on the impact on their entitlement to means tested benefits?
  2. Will older people with no previous pension provision be advised not to save in a Personal Account?
  3. If so, would it just be people in their 50ís, or could it also be some people of 49, say, or 47, or 41 even; or 39 come to that?(Indeed, any indication you could give of the exact cut-off age would be enormously helpful.)
  4. Will your department use its knowledge of the National Insurance histories of those swept into saving by auto-enrolment to help individuals understand their own position with regard to the available benefits and tax credits?

Thanks in advance for your help on this.

Steve Bee

1 February 2007


FSA Website, January 2007 Financial Advisers Newsletter

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