Do your pension scheme members a power of good!

Our viewpoint

Nobody really wants to think about a time when they may not be able to look after their finances. But there are all sorts of reasons why people can’t – or don’t want to – deal with complicated things like their pension.  At LCP we’re seeing the use of Lasting Power of Attorneys (LPOA) increase amongst members of the pension schemes we administer, as the benefits of having one in place are becoming more widely known; they can really help ease the burden for a relative or friend who is trying to help at a potentially emotional time.

Setting up an LPOA for the future is something some of your members may be putting off – but they shouldn’t. In England and Wales, an LPOA for property and financial affairs can be set up, without a solicitor, using standard forms available from the Office of the Public Guardian at a cost of around £80 (a similar system exists in Scotland). And it’s beneficial for a number of reasons:

  • It's not just for old people

It’s true that older people are more likely to need one, as the effects of ageing often mean a reduction in capacity – and interest – in people handling their financial affairs. However, LPOAs can be useful in a range of circumstances – for example for those who are planning on spending a period of time abroad, or have an operation planned and are not confident about being able to deal with their finances while recovering.

  • A member’s spouse or child can’t sort out their pension for them

This is a common misconception – being a spouse or a child does not automatically give someone the authority to handle a member’s financial affairs. Without an LPOA, a spouse can’t ask us to change the member’s address or bank details for example, and we cannot provide them with payslips or other financial information.

  • Not having a LPOA may make things more difficult later on

If a member doesn’t have a LPOA in place then they will need to be prepared to handle their finances indefinitely. Should they lose mental capacity and not be able to take decisions, an application may need to be made to the Court of Protection to appoint a Deputy to manage their affairs on their behalf. This is a lengthy and costly process, and the Deputy will have formal responsibilities, including the submission of an annual report to the Office of the Public Guardian.

Three things trustees can do

  1. We strongly recommend encouraging your members to consider setting up a LPOA. You can highlight how useful one is by putting an article in your next newsletter or adding some wording to your scheme website.
  2. Make sure your administrators are using their business as usual communications to explain to members how helpful it is to have a LPOA in place and what this would mean in practice for their pension benefits.
  3. If your members have LPOAs in place, ask them to let your scheme administrator know! If appropriate, we ask members of the schemes LCP administer to let us know if they have a Power of Attorney in place. Once we have checked that it has been registered with the Office of the Public Guardian, we can then accept instructions from the member’s Attorney(s) should the need arise in the future.

Help give your members peace of mind that someone they trust will be able to sort their pensions matters if needed. You’ll be doing them a power of good!

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