City watchdog warns that financial advisers are offering inappropriate advice to people tempted to 'cash in' their final salary pensions
City & Finance Reporter for the Daily Mail
Financial advisers are offering inappropriate advice to people in their final salary pensions, the City watchdog has warned.
Instead, says the Financial Conduct Authority (FCA).
It looked at 18 firms which offered retirement benefits, saying: 'We found firms that had recommended transfers where the client's needs and circumstances meant retaining the defined pension benefits have been in their best interests . '
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Final salary and career average pensions – defined benefit (DB) pensions – guarantee a set percentage of their wages every year after retirement, and were the norm.
But low interest rates for companies to be hired, or for companies to be hired.
The FCA said: 'At several firms, management failed to identify and mitigate risks associated with DB transfer business.'
It is estimated that 100,000 people are transferring as much £ 30bn out of their pensions every year. The FCA did not name the firms it probed, two of which have ceased trading.
Shortcomings included encouraging investment in schemes with high rates.