View more on these topics

FCA reviews pension transfer qualifications

The FCA is considering reducing pension transfer qualification requirements as the industry grapples with access to advice post-Budget, Money Marketing understands.

The issue of pension transfer advice was brought to the fore after Chancellor George Osborne announced reforms which will grant savers greater freedom over how they spend their retirement pot.

The Government has already proposed mandating advice for defined benefit to defined contribution transfers in the wake of the Budget.

And sources at compliance networks and providers indicate they are expecting the FCA to communicate a relaxation in their interpretation of existing legislation for transfers from occupational DC schemes to drawdown arrangements.

Experts say the change, if implemented, will iron out a long-standing anomaly in the regulator’s pension transfer rules and allow more people to access advice. 

But will savers be exposed to greater risks as a result? And are advisers willing to accept the compliance burden associated with this notoriously complex area of the market?


Emails seen by Money Marketing show Standard Life has recently told advisers transfers from an occupational DC scheme “for the purposes of immediately entering drawdown” require the adviser to have the FCA’s pension transfer and opt-out permissions. 

It says: “The FCA have indicated that they do consider transfers of occupational pension schemes for the purposes of immediately entering drawdown as pension transfers. Based on their interpretation, any such transfers would require the “advising on pension transfers and opt-outs” permission.

“The FCA have indicated to us that they will communicate to the industry on this point although we remain unclear as to when any new guidance will be published.”

A spokeswoman says: “We are not able to comment on a specific exchange with an adviser but this is an area where we seek clarity.”

It is understood the FCA is considering a move that could see it clarify advisers do not require transfer and opt-out permissions for occupational DC to drawdown transfers.

Money Marketing understands the FCA is considering amending existing rules. No changes have yet occurred, however, and sources say the ongoing review may or may not result in an industry update.


Interpretations of the current rules governing DC to drawdown transfers are understood to have differed across the industry, with some firms viewing such transfers as permissible without transfer and opt-out permissions.

Compliance firms and providers have made enquiries to clarify the situation with the FCA.

A spokeswoman for the FCA declined to comment in detail other than to say the regulator was “aware of the issue” and confirm that no rule changes had yet been enacted.

Experts say the new pension freedoms introduced in the Budget may not be accessible for many if the advice hurdle is too high.

Last month, experts raised concerns mandating advice for DB to DC transfers may mean consumers with smaller pension pots that want to quit their DB scheme may find they struggle to pay for advice.

Now providers say requiring pension transfer and opt-out permissions of advisers working on occupational DC transfers also risks pricing consumers out of the new pension freedoms.

Standard Life head of workplace strategy Jamie Jenkins says: “We support the need for regulated advice for DB to DC transfers.  The two are very different and most members, but not all, will be best off sticking with DB. People need protection against transferring for the wrong reasons in these circumstances. But at retirement DC-to-DC transfers, to immediately go into drawdown, are different.

“In the post-2015 world, access to the new freedom and choice is provided via a ‘strengthened right to transfer’. So these at retirement transfers to access the chosen income option should be thought of as the new open market option, while mindful of the importance of protecting people’s right to tax- free cash.

“Occupational schemes are least likely to offer access to the new freedom, owing to trustee concern about fiduciary responsibility, leaving transfer as the only access route. Imposing an extra advice cost will price many out of it – leaving them to go it alone. The Government should consider this impact on the availability of advice.”

Aviva head of policy John Lawson adds: “Certain DC transfers could be exempted. Nest, for example, is a DC scheme so in theory you would need the permission, which seems somewhat excessive when you’re going from money purchase to money purchase.”


Pension transfers are notoriously complex and pose a risk to advisers from a compliance point of view.

Affluent Financial Planning managing director Carl Melvin says any advice regarding pension transfers is priced at a premium because of the complexity of the advice required. He argues whatever the permissions required by the FCA, pension transfer advice is still likely to be expensive for consumers.

“DB is a very different beast to DC and has valuable guarantees in play. So it is key that the advice should only be given by people with advanced qualifications,” he says.

“DC to DC is different because it is money purchase to money purchase. It is just one within a framework of an occupational environment and one is a personal arrangement. So it is much less problematic but you still have to be aware of elements in the occupational scheme which may influence a decision.

“A lot of younger guys who have come from bancassurance might not be that familiar with older style pensions and older style occupational arrangements so it is a question of how do you put in place permissions that protect the consumer and ensure the adviser is technically competent.”

Supply and demand

LEBC director of longevity Nick Flynn says obtaining pension transfer and opt-out permissions is a tough hurdle to cross for most advisers. He says: “The exam is one of the tougher ones and although most of our guys have it and it is not a huge stretch if you are doing this kind of business regularly, if you are not particularly active in the market it is not an easy exam.”

Melvin agrees there are few advisers with the permissions and even fewer willing to advise on small pots, echoing provider suggestions that access to advice could be constrained for some. He says few advisers offer transfer advice because of the compliance risk involved.

“This kind of advice is toxic because even if everything is compliant, honest people will still make bad choices when they are desperate for cash and even if we as advisers say ‘don’t do it’ they will still go ahead and make the transfer,” he says. “So there will be a big problem with advisers being not only able to give advice from a permissions perspective but also being willing to give this advice.”

Adviser Views

Greg Heath, managing director, Derbyshire Booth


Some networks insist that any types of transfer be checked first regardless of the type of transfer being done. Issues around permissions create delays on the ground because it results in more business having to be double-checked even though in many cases it can be very simple. Combined with delays from Sipp administrators and so on, advising someone can be held up by months. That is a real challenge if we have someone approaching retirement because we have to tell them we can’t finalise the advice we’ve given until the case has been signed-off by the authorising network. 

Lee Robertson, chief executive, Investment Quorum


The problem is that transfers are so easy to get wrong. The public have been given a huge amount of freedom with their pensions and I worry there may be a big rush to take advantage when it would be sensible to take a deep breath and make sure all the options are thought through. The simplest thing to do would seem to be to get the qualification to be safe.

Expert view


Several providers are reluctant to accept transfers from advisers without G60 pension transfer qualifications, triggered by recent behind-closed-doors comments from the FCA.

This has sparked concern because some firms have been signing off transfers that the regulator may argue should not have taken place.

Meanwhile there are others in the industry that believe the FCA should remove the requirement for specialist qualifications around occupational transfers.

I must declare an interest here having been involved in the design of G60 which was commissioned by the then regulators to prevent those not competent from advising on occupational transfers.

I am not surprised by the view that taking benefits be considered transfers and not vestings. If the client is not at their scheme’s normal retirement date then in my mind it is a transfer; those at scheme retirement date are vestings. It is also important the client receives advice on all of their options. Pensions are getting more and more complex and it is no longer a case of picking a single route. We now have the equivalent of a buffet where mix and match will be the way forward for many.

Therefore, to provide clear advice in this area requires a higher level of competence than diploma level. This will not be a popular point of view but if the regulator slips this on the “too difficult” pile it may regret that decision later.

Equally, the alternative is a full review of pension transfer business. Whether the regulator has the stomach for that is another question entirely.

Rob Reid is director of Syndaxi Chartered Financial Planners


News and expert analysis straight to your inbox

Sign up


There are 26 comments at the moment, we would love to hear your opinion too.

  1. Undoubtedly this will happen, then a bunch of discount cowboys will spring up with national adverts promising to “unlock” money which is “tied up” in occupational schemes. Then, 5-10 years down the line, the FCA will realise the error of their ways when huge complaints start coming in about unsuitable advice. By this time though the cowboys will have moved on to their next adventure, leaving honest advisers to pick up the pieces and paying much higher FSCS and FOS levies.

    I hope I’m proved wrong…

  2. The changes wrought by the Budget have at a stroke made all pension qualifications redundant. I remember spending hours memorizing idiotic facts that could be accessed immediately on the web in order to answer questions for the pension exams. I remember sorting out the portfolios of multi millionaires in 20 minutes. I remember constructing my own excel file that instantly calculated everything to do with pensions and tax, and then having to learn how to answer the questions with a pen and a calculator in exam conditions and given 30 minutes to do it. The whole thing needs reviewing including the relevance of 3 hour exams with a crap calculator and a pen. Let’s have something that is related to the real world!

  3. Potential for another banking scandal, can you imagine all those poorly qualified, internally regulated bank staff being let loose on DB transfers/vestings?

    To be fair a large section of the advisory community do not have the technical knowledge to advise in this area. I personally passed Robert Reid’s G60 paper, plus have 41 years experience, double Chartered and Fellowship status, and 510 CII examination credits. Despite that I am still learning all the time. It is specialist advice, and one of the biggest decisions a client will ever make in their lifetime.

  4. richard libberton 4th September 2014 at 10:58 am

    I think the AF3 advanced paper is an absolute must and goes a long way to demonstrating pensions specialisation. The trouble for me is that my particular sitting was largely made obsolete almost immediately, by the rapid change in often contradictory legislation. I’d personally like to see a tailored CPD regime for on-going pensions advice, after the level 6 pension exam is passed.

    But that’s just me.

  5. If you google ‘Pension transfer – who can do what when’ you will be taken to a factsheet from the FSA in 2011 that I still consider to be current. If I am wrong then I’d appreciate someone helping me find a succinct update to the information in that document, which states…

    Deferred benefits – The glossary definition of a pension transfer refers to deferred benefits. In
    this context benefits are deferred if they are not continuing to accrue and the benefits are not
    being taken. If an individual has access to the benefits (perhaps due to early retirement rights)
    but is not intending to crystallise the benefits then they are deferred benefits. If an individual
    is transferring benefits for the purpose of crystallising the benefits these will not be considered
    deferred benefits (but there must be evidence that the scheme member does intend to take/
    crystallise the benefits).

    Having checked the FCA glossary just now, the above definition still stands. Unless the FCA is saying that deciding to retire is an opt-out, which is a ludicrous suggestion, then I can’t see how any advice given to a deferred or active member of any type of registered pension scheme where benefits are about to be crystallised would currently be subject to the requirements of pension transfer specialist status adviser sign off.

    Help me out if you disagree?

  6. Having just spoken to my Standard Life rep, I’ve been told this article is wrong. The FCA are talking about tightening up the rules not relaxing them. I was worried when I read this as I have always assumed that its ok to carry out a pension transfer if the client is immediately taking benefits but it suggest above that thats not the case.
    Standard have told me that historically it is ok to do this but going forward i might need the appropriate permission…..that makes much more sense than what is written above…even the regulator wouldnt allow any firm to transact business in a complex area such as this

  7. @ Benjamin Fabi

    See here:

    No mention of whether or not benefits are taken. I don’t know if I’m in the minority here, but I fully think that transferring in order to take benefits immediately vs transferring pre-retirement should still have the same regulations and processes.

  8. Robert Reid makes a lot of sense as always.
    I don’t have G60 or AF3 yet as I have always avoided occupational pension transfers like the plague- I refer them to other qualified IFAs and only about 1 in 10 are advised to transfer if that as many are too small to warrant the fixed cost of the initial advice.
    I am finally going to sit AF3 as well as Af2 this October, but suspect I’ll need to resit AF3 in April as I am not at all confident with Af3 and even if I pass second time, will probably NOT vary my permissions to advice on DB transfers.
    Like Benjamin however, I do think that DC to DC and vesting of DB is different and it would be useful to have clarification from the FCA on this as I did think that DC to DC did not require G60/AF3 and same with vesting at NRD etc.
    As APFA said the other day, that is the problem with an 8ft pile of A$ rulebook and if when MM ask the FCA they can’t get a straight answer, what hope for us as advisers!

  9. In the coming days a TV programme will be broadcast. That programme will demonstrate the damage caused by “advisers” who are not on the FCA register have not just ruined peoples lives but cost lives. There is a real problem if there is relaxation, hopefully the powers to be will see the programme and reflect.

  10. I have to say, as someone who deals in this market and who has G60 and AF3, it would be a dangerous move to let some advisers at this market without the right skills and understanding.

    Too many IFAs who don’t know what they are doing will “have a go” just because of the fund sizes. (And I am sure we all know advisers who shouldn’t be advising on anything never mind the complexities of pre 88/post 88 GMP, revaluation, escalation, section 92B rights etc.)

  11. Thanks @Paul Williams – that is a copy of the table on the final page of the document I referred to so it looks like nothing has changed since then and currently anyone authorised to give advice can advise on any scheme at crystallisation.

    I agree with the points that Rob Reid makes, although I think that the determination should be made based on whether the client is actually retiring and replacing lost income with the benefits being considered.

    In fact, where the complexity is arising now is in the decumulation phase, whereas all of the previous regulatory scrutiny was (rightly) placed on the benefits being lost on transfer whilst deferred. The accumulation phase is becoming really simple, gone are enhanced TFC, GAR, GMP, S2B, underpins. Now it’s basically an ISA without income tax relief and with a restriction on access.

    Personally I would say that transfers should remain as they are now ie pension transfer specialist status required, with ‘at retirement’ advice for unsecured products being able to be transacted by either level 6 advisers without a G60/AF3/equivalent or pension transfer specialists. It seems harsh to prevent Chartered advisers transacting at retirement business if they did every advanced CII paper apart from the pension one (perhaps only because they didn’t do OPS transfer work)

  12. Based on my direct experience in running, the average client has 3 pension plans.
    Inevitably, one or more of these pension plans will be occupational, with a high likelyhood that some will be Defined Benefit (DB).
    Other plans may include old style S226 deferred annuities with Guaranteed Annuity Rates (GARs) built in, or S32 Buy Outs
    In the case of DBs, S32s and S226s with GARs the adviser must be a pension transfer specialist.
    How on earth do the FCA expect to untangle this?
    Will the ‘new wave’ of Advisers, without G60 or equivalent be expected to ignore the plans that require the current FCA permissions, and if so how will they meet the ‘know your client’ requirement and demonstrate ‘suitability’ by ignoring the plans thet require specialist advice?

  13. @ Benjamin & Paul – I’m with Ben on this one. I can recall the FSA issuing clarification on this issue as far back as the early 2000’s – the frustrating thing is while I can virtually repeat some of the exact content word for word I can’t I locate the item in question.

    The wording I recall went something like – ” if the ceding scheme has quoted an income which is capeable of being paid and which the member intends to take, then the transfer will not be treated as a pension transfer”. The key thing was that the ceding scheme had quoted an income (with all it’s various terms, spousal pension, tfc etc. What was clear – and I think reasaonable, that if the client was going to reitre and contemplateing taking an income from the scheme, then transfer to another arrangement was simply comparing one income to another income arrangement that could and would be taken.

    Have to say I have no axe to grind on this – I’ve held G60 for years – been a transfer specialist since the term was invented – don’t have a difficulty if they were, just that in these specific circumstances I vividly recall the FSA saying they weren’t – with which, somewhat unusually, I actually agrred with our lords and masters at the time! Comparing one income to another – whether straightforward FS DB to open market annuity stright comparison or DD (cavaet all the usual DD issues being much more complex) is not the same thing as comparing preserved benefits.

    Of course whether or not DD of itself should require a specialist qualification is another matter. Personally I think it should require a formal specilaist qualification rather than the general “be competent” requirements as now.

  14. Bethell Codrington 4th September 2014 at 3:15 pm

    Paul Williams will regrettably be proved right. This is a result of a badly thought through knee jerk announcement by the Chancellor. Whether it is a good idea is another matter, but it clearly shows there was little consultation or thought process. I am glad I do not contribute to FSCS and FOS levies

  15. @ Benjamin Fabi

    See here:

    No mention of whether or not benefits are taken. I don’t know if I’m in the minority here, but I fully think that transferring in order to take benefits immediately vs transferring pre-retirement should still have the same regulations and processes.

  16. There’s a difference between unlocking and genuine retirement. We’ve been through the unlocking issue some years ago – done by regulated firms some of whom didn’t seem to fully comprehend the implications resulting in heavy fines. I don’t think the FCA would be suggesting a “free for all” in this market with completely unqualified advisers / unregistered firms etc. Just what level of exam is required.

    The different issue is actual reirement (whether at NRD or early or late) where the member has said that’s it, I quit, pay me my income (not shall I shan’t I go now or later etc). That raises the question of if it takes a complex qualification with attendent expense at all levels for any scheme member regardless of fund size to make an effective choice, then the market will be very restiricted and expensive. I don’t mind restricted and expensive – good for profitabilty. I’m just not conviced in these explicit circumstances that it’s not an expensive overkill.

    To re-iterate my earlier point though, I do think that drawdown should have an exam requirement – much more complexity with that in the long term, and yet there’s no formal exam requirement.

  17. @Chipping

    I pretty much agree with everything you’ve said there – secured income retirement options when a client is retiring should be open for any authorised adviser to deal with.

    Anything unsecured should require additional knowledge, gained either through a specified exam as you say or by being level 6 with some professional body mandated CPD. I think that the J05 exam on retirement options would be enough for this test though.

  18. Confess I’ve not taken J05 or studied it in detail, but the syllabus pretty much seems to suggest it covers key points. I’d certainly have hoped it should provide a satisfactory result.

    I did do R04 – only because I ran a training course for the unit and felt somewhat obligated to lead by example as it were. From memory I recollect feeling that while it touched on the subject, it really wasn’t anywhere near the mark to let an adviser loose on a client for drawdown (fair enough really – I guess it’s not intended to, which is what J05 is all about).

  19. Reading the comments I can see some advisers have not understood this revolution. The old exams are useless. Here’s an example. Client has OP and has been offered £53k pcls and £7,900 RPI max 3%. Or he can transfer £252k for immediate vesting. It will take more than 25 yrs of receiving pension to match transfer. Client has health problems and has spouse. Anyone could work that one out.

  20. Ken, with respect the old exams are not useless.

    J04, J05 and AF3 provided me with a solid foundation of technical knowledge on which all subsequent learning, through CPD, has been based. Whilst doing these I also referred to the old K10 and K20 course books (I took J04 and J05 in 2006, the first tax year of their release) to get wider knowledge of the pre A-Day regime, as well as G60. I was fortunate to be able to get access to this material from other colleagues and I still have copies of parts of it today for reference.

    As more people than in 2006 and before have access to unsecured pensions the need to have knowledge at a good technical level becomes more important. Not least because as access is improved the average level of comprehension of those with access diminishes. These will be people of all demographics and who have perhaps never taken financial advice, not top quartile earning or otherwise normally intelligent people who may have taken advice for years (as was mostly the case for the first 10-12 years of PFW/USP).

    J05 is still only a level 4 qualification, although it is a written paper and is worth double the credit of the multi-guess R04 option. It should provide all that is required and be up-to-date enough to satisfy the requirements of the mass-market about to arrive. And it should be easy enough for most dedicated level 4 advisers to sit and pass.

  21. @Ken – brave and decisive. I do hope clients circumstances and future events support your confidence…..

  22. Benjamin, you’ve misunderstood me. I’m not saying the old exams are useless, I’m saying the old exams are useless in relation to the new regulation that allows access to the whole of the pension fund. Look at the real example I gave above. You don’t need any exams to understand which vesting option is right for the client. Just because it’s money coming from an OP and is called a “transfer” it’ doesn’t mean it’s a transfer. It’s not a transfer at all, it’s another vesting option. It will have to be called something else. I’ve already had one client telling me that he can’t get a transfer quote from his USS to compare to his vesting options because a guy said, “My goodness, you don’t want to be transferring your pension!” He has been given three options with varying lump sums and I told him to get a quote for the option of a transfer. If it comes anywhere near to his LTA of £840,000 then I know which option he will choose! Obviously the guy at the USS is confused by the terminology.

  23. Sorry Ken, I was confused by your statement in the previous post that said ‘The old exams are useless.’

    It is important to have the technical understanding of the different types of pension options a client already has. How post ’88 GMP escalation is treated for example, or widowers’ pension on pre ’88 GMP. When the state pension changes in the coming years, will knowing about the current framework be irrelevant? Of course not.

    Don’t get me wrong, I’m not trying to overstate the simplicity of certain situations. Although even the ‘simple’ example you give you have said that it would take 25 years to get the £252k transfer value from the DB scheme. But the pension escalates and you’ve not allowed for this.

  24. Benjamin, referring to my example you say “the pension escalates”. Sure, by a maximum of 3.0% pa. Surely you realize that the drawdown fund should at least match inflation with investment growth.

  25. I haven’t ever done a DB pension transfer as when I joined the industry the pension review was well underway and I saw a couple of businesses destroyed and long careers ruined by it which put me off somewhat. Having said that I did pass G60 I think in about 1998. Since then, there have been one or two changes in pension legislation that makes what I learned rather outdated.
    I could if I wanted to get the authorisation today for my business. I won’t as I’m not interested in this type of work, but G60 is no guarantee that you still have a good understanding of the current issues. Which is way when I was talking in theory about this to our compliance chap, the big discussion was “G60 is all well and good, but we are going to have to evidence a S**t load of relevant CPD before you start giving any of this type of advice”…
    I personally would say that G60 (certainly pre A-Day) doesn’t have much relevance anymore and if I was the FCA would probably insist on AF3.

  26. HELP. My IFA does not have the G60 qualification and I cannot find one who is not inundated (and very expensive) in the time I have left to transfer my DB at current value. I am DESPERATE to achieve closure as I approach retirement age for the DB scheme in two weeks and have lost two months of precious time due to prevarication between various IFAs. I can see my full entitlement being lost and all I want is my original unqualified IFA to handle transfer to my chosen schemes. Surely, as it is MY entitlement I should be protected by choosing whomsoever I wish as and IFA or be able to conduct the transfer myself. This is madness and I have lost so much time through no fault of my own, this so called protection is screwing up my life and future.

Leave a comment


Why register with Money Marketing ?

Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

News & analysis delivered directly to your inbox
Register today to receive our range of news alerts including daily and weekly briefings

Money Marketing Events
Be the first to hear about our industry leading conferences, awards, roundtables and more.

Research and insight
Take part in and see the results of Money Marketing's flagship investigations into industry trends.

Have your say
Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

Register now

Having problems?

Contact us on +44 (0)20 7292 3712

Lines are open Monday to Friday 9:00am -5.00pm