In its latest consultation paper, the FCA also makes clear that it will be the responsibility of a fund’s trustees to check that people have received that advice. These FCA regulations had previously only related to transfers from DB schemes to personal pensions.
“Defined benefit (DB) schemes pose particular issues and we need to ensure that those who are considering moving away to other arrangements are fully aware of the potential benefits they are giving up,” said Christopher Woolard, director of strategy and competition at the FCA.
“In many cases transferring from DB to DC may not be in the member’s best interests and ensuring independent advice is taken is an important protection,” he said.
As part of its 2014 budget the British government announced fundamental reforms to how people are able to access their pension savings, which means that from April this year everyone aged 55 and over, with defined contribution pension savings, will be able to access their money much more easily and flexibly.
Since the changes were announced the FCA has been busy publishing a range of papers and new rules covering the implementation of the new reforms.
Its latest move requires that all advice on transferring funds from a defined benefit scheme to a defined contribution scheme be provided or checked by a Pension Transfer Specialist. The rule change will make advising on transfers from DB schemes into DC schemes a regulated activity.
“The new regime will make advising on pension transfers significantly more complex, so we now wish to require the Pension Transfer Specialist qualification for advice on all transfers from DB schemes to DC arrangements, regardless of when the transferred benefits are being accessed,” the FCA said in its consultation paper.
The FCA has opened a consultation period on the proposed changes to its rules which will run until April 15 to enable it to have its new rules in place for June 2015.
“The FCA has made it clear that advisers will need to tread very carefully when dealing with this and it is still perceived to be the case that in most scenarios remaining in a defined benefit scheme will be the most suitable choice in the long term,” Richard Eagling, head of pensions at Moneyfacts.co.uk said.
