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Final-salary shortfalls sparks drive towards transferring

Fears of shortfalls in finalsalary schemes are driving more people to look at transferring preserved pension rights, says Millfield.

The company says media coverage of the £100bn black hole in final-salary schemes and pension shortfalls on schemes winding up is pushing clients towards transferring.

Millfield says many advisers are steering clear of pension transfers after getting problems in the pension review or they are not registered to conduct transfer business.

But it says IFAs owe it to their clients to ensure that their preserved rights are secure in their final-salary scheme.

Millfield says the minimum funding requirement&#39s three-yearly accounting cycle means funds with older valuations could be giving more generous transfer valuations than their assets currently merit.

Millfield pension specialist Graham Duckett says: “Every day, people are reading in the papers about scheme deficits. We do not know where the stockmarket is going and when a scheme closes to new members, it is not certain that it will pay out in full.”

Informed Choice managing director Nick Bamford says: “People in the ASW steel company scheme, where workers got a fraction of their expected pension value, would see their IFA as a hero if they had been advised to transfer out two years ago. People who know their former company has financial difficulties and also know the scheme has a shortfall should take advice.”

FSA spokeswoman Louise Buckley says: “Advisers have to assess each case in isolation, based on the factors in the market at the time and assessing the nature of the risks on staying in or coming out.”

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