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DB transfers hit £60bn since 2015, Royal London FOI reveals

Steve Webb

Defined benefit transfers have passed the £60bn mark since the pension freedoms started in 2015, a Freedom of Information Act Request reveals.

Provider Royal London asked The Pensions Regulator to supply the 2018/19 data on the volume of transfers out of DB pension schemes and the value of those transfers.

It also asked the watchdog for the latest estimate of 2017/18 data on the same basis.

The FOI was submitted by former pensions minister Steve Webb who now works for Royal London as director of policy.

It finds that well over a third of a million people have transferred over £60bn out of DB schemes in the last three years.

The breakdown of the number of transfers and value of transfers by financial year is contained in the table below.

Webb says: “These figures show the continuing huge interest in using pension freedoms to access pension rights in a more flexible way.

“Although the volume of transfers has probably passed its peak, large numbers of people are still interested in seeing whether reshaping their pension benefits would be in their interests.

“It remains the case that staying in a DB scheme will be the right answer for most people, but there may be individual reasons why a different combination of pensions would give a better outcome. In such cases it is vital that there continues to be a supply of impartial and expert financial advice for those considering making such a big decision.”

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Comments

There are 2 comments at the moment, we would love to hear your opinion too.

  1. Well the Revenue are happy. So are advisers, until the claims start coming in. More fertile ground for CMCs?

  2. It will be very interesting to see how the FOS approach their rulings on DB Transfers. The Claims Companies are already phoning consumers with promises of additional funds on a no win no fee bases. To this end the compensation for DB Transfers needs to be changed to an annuity, to replace what the consumer had within the DB arrangement, less any funds they have spent. I wonder how many consumers would not proceed when faced with an annuity, loss of death benefits and fixed income, all the reasons they initially wanted to transfer. Giving these consumers additional funds is unethical, does not resolve their complaint, an annuity would.

    As most of us know the vast majority of claims are likely to occur when the investment markets take large fall, or when the consumer has buyers remorse and selective memory loss when the funds run out. The vast majority of advisers will have covered these dangers and have them well documented within their files.

    As a meeting recently a lawyer stated that if faced with a good advisers file, in 80% of cases if they had to go to the Courts to gain a ruling, they would advise against it. However, as they will be dealing with the FOS, they stated they would proceed to a claim, as the FOS is most likely going to side with the client. How can this possibly be fair? This highlights the failings of the system, even when advised correctly, documented correctly an adviser still cannot be confident of a fair outcome.

    It highlights the massive issues faced by the good practicing advisers, who faced with no actual rules or process from the regulator, the current costs both now and in the future,unable to gain PI Insurance, uncertainty of how the FOS will rule are leaving this area of advice.

    The annual PI cost to insure a DB Pension transaction is approximately £575pa this year. How can any business factor that cost in long term within the initial charge? When the claims truly start this cost will increase each year at renewal.

    I can see within a very short period of time this area of business will be almost impossible to gain advice, which is not good new for any consumer.

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