Experts react to DB pension transfer ruling
By Tom Carnegie, 26 Mar 18
Pension experts have welcomed the clarity the Financial Conduct Authority (FCA) has established for defined benefit (DB) pension transfers through its updated rules. But they warn further, lengthy, consultation may not be the best way to address issues of poor practice that have come to prominence in recent months.
Steven Cameron, pensions director at Aegon, said the updated rules should be welcomed by advisers and consumers.
“Demand for advice on DB transfers has never been higher and the FCA has now set out clearly ‘what good looks like’ allowing advisers to meet demands from their clients with confidence,” Cameron said.
He said the new approach offers a “clear framework and methodology” for taking into account all of a client’s needs.
“Moving away from the outdated transfer value analysis allows proper reflection of the potential benefits of pension freedoms.
“Showing in pounds and pence the difference between the transfer value on offer and how much it would cost to replace scheme benefits, albeit still with an annuity, will aid consumer understanding,” he said.
Cameron said it was “pleasing” to see a potential ban on contingent charges may introduced by the FCA.
“This approach to charging does appeal to certain customer segments so an outright ban could widen the advice gap. The proposed triage service has the potential for those customers for whom transferring is unlikely to meet their needs to ‘self-select’ away from advice at an early stage,” he said.
Tags: Aegon | DB pensions | FCA | Fidelity | Old Mutual | Royal London
Christopher Lean says:
Would it not have been a more balanced article if the opinions of firms with pension transfer permissions had been considered as well? The new rules will affect the way in which pension transfer advice is given and the companies quoted are not advisers.