View more on these topics

Claire Trott: The shifting sands of pension transfer advice

Claire Trott Talbot & Muir

I have just completed a number of seminars around the country, during which I asked for some opinions from the advisers attending on pension freedoms. There has been so much change in the industry in the last few months that it was interesting to have the opportunity to really talk to them.

One of the things that stood out was that 62 per cent thought advice needed to change because of the reforms. For me, people’s needs have not suddenly changed because the retirement options are slightly different. For advisers, however, a big impact will be the changes to when a pension transfer specialist will be required, which will affect both those with the permissions to advise on them as well as those that do not.

The area I feel that will impact most on advisers, especially those who are not pension transfer specialists, is at-retirement advice.

Currently, any adviser can advise on their client’s pensions at retirement even if they have a defined benefit scheme or a section 32 with guaranteed minimum pension. Since 2011, when the FCA clarified when a pensions transfer specialist was needed, immediate vesting transfers have been outside the rules for “pension transfers and opt outs”.

This has meant that, when reviewing the client’s immediate plans, if it becomes apparent the DB scheme does not meet their requirements then they can be transferred. Many reasons, especially the difference in death benefits and control, are often cited for these transfers. There is no need to look at the complex structure of the DB scheme in deferment, just the benefits that will be paid there and then. In addition, there is no requirement for a transfer value analysis, which is complicated and time consuming to produce in some cases.

In its policy statement on proposed changes to pension transfer rules (PS15/12) the FCA announced this is all going to change. There will be a need for a pensions transfer specialist to be involved in a transfer even for immediate vesting transfers of defined benefits and section 32 with GMP. This will mean that, should an adviser not have a pensions transfer specialist within their company, they may need to outsource many of their clients’ at-retirement reviews. The reasoning behind this is that the difference between the guarantees in a DB scheme and the new flexible benefits available in a defined contributions scheme is much greater than ever.

On the flip side of this, the removal of the need for a pensions transfer specialist where there are no safeguarded benefits, even if in an occupational scheme, will open up this type of advice to those previously excluded. This is a very sensible move on behalf of the FCA because if there are no safeguarded benefits then there is little difference between an occupational scheme and a personal pension these days. Overall the changes will protect clients, which can only be a good thing in the long run.

Claire Trott is head of pensions technical at Talbot and Muir



Santander unveils ringfencing plans

Santander has revealed how its UK business will meet the ringfencing rules for banks, appointing heads of new retail and corporate divisions. The UK branch of the Spanish bank will split into a retail arm for personal and small business customers and a corporate division for institutional clients and its markets business, according to the […]


Towers Watson to merge with insurance broker in £11bn deal

Risk management and consultancy firm Towers Watson is to merge with insurance and reinsurance broker Willis Group in a deal worth around $18bn (£11bn). The merger was announced in a statement this morning. The enlarged company will bring together global advisory and broker services and will be named Willis Towers Watson. Under the terms of the […]


UK GDP growth revised up

The UK economy grew faster than expected in the first three months of 2015, official figures show. The Office for National Statistics says the economy grew by 0.4 per cent in first quarter of 2015, compared with the previous estimate of 0.3 per cent. GDP was also estimated to have increased by 3 per cent in […]

Fidelity: When will central banks tighten monetary policy?

As we move into the second half of 2015, central banks’ policy stance will be front-of-mind for investors. Loose monetary policy has supported global growth since the financial crisis but, as recovery becomes more entrenched, central banks are finally looking to exit this period of extraordinary accommodation and start tightening policy over the next few […]


News and expert analysis straight to your inbox

Sign up


There are 6 comments at the moment, we would love to hear your opinion too.

  1. Claire,
    I believe your article has correctly identified both the reason why there should be no need for a PTS at retirement and why the FCA thinks there should be. You correctly identify that many of the reasons cited for transfers ‘at retirement’ centre around a client’s objectives and needs in retirement, whereas the FCA’s view centres around product features and the expertise required to correctly compare and contrast these features.

  2. Howard Barnes 2nd July 2015 at 1:43 pm

    Claire, I am not sure when you wrote this article, but you state in PS 15/12 the FCA announced this is all going to change. The new rules came in as at 8th June 2015 so this is out of date as the rules are now in force as per the FCA handbook under COBS.

    • Howard as I am sure you appreciate there is a delay in publishing from writing these so you are correct the “this will all change” should probably say “this has all changed” now.

      • Howard Barnes 9th July 2015 at 9:27 pm

        Hi Claire, that’s why I asked the question as I wasn’t indicating that this was incorrect but clarity to readers who may not have any form of compliance support and may need to act on their existing permissions and qualifications now. I appreciate that articles are sometimes being issued sometime after an event has actually occurred, best regards Howard.

  3. I work in a large organisation where some of my peers wouldn’t know a COMP with a GMP entitlement from a standard GPP. Investors are either going to lose these guarantees without even knowing that they exist, or we could face Pensions Misselling Mk II in the future. I agree that occupational transfers without safeguarded benefits do not require specialist pensions advice, but organisations need to ensure that advisers are able to identify the safeguarded benefits in the first place.

  4. So can a firm without pension transfer permissions advise on a pension switch from occupational DC scheme with NO safeguarded benefits to a PPP now ?

Leave a comment