Ask any adviser about whether they deal with insistent clients, and more often than not you get a categorical “no”. Bodies such as the Personal Finance Society have made their stance clear, in that the future risk of liability is just too great.
The debate is loaded, but the picture is a more nuanced one than the commentary might suggest. Just because firms are saying no to insistent clients, does not mean they are saying no to final salary pension transfers. In fact, defined benefit to defined contribution transfer business is being written at a record rate, and when you factor in not just the transactions but the level of enquiries, it is clear demand for DB transfers is sky high.
Members of DB schemes have heard what pension freedoms have to offer, and they want a piece of it for themselves. The flexibility is a big pull factor here, but the enticing transfer values currently on offer are also holding sway.
Headlines about the poor pensions prospects for BHS and Tata Steel do not help to instill public confidence in the pensions system, and all of this fans the flames for demand to transfer out of DB schemes.
From speaking to advisers at our recent Money Marketing In Focus regional events, it is clear there are some very competent advisers recommending DB transfers, who are backed by a robust advice process.
But separately, advisers have also raised concerns about how the pension transfer market is working. Firms charging £40,000 to carry out a transfer for example, or charging only at the point of transfer.
There are two opposite problems facing the pension transfer market at the moment, strangely with both happening at the same time.
There are firms who will not touch DB transfers with a bargepole, even if suitable advice would be to transfer. At the other end of the spectrum, the demand for pension transfers is such that, if not done right, we risk building up problems for the future.
Increasingly, advisers are being urged to consider the rationale for carrying out transfers, rather than assuming a position of blanket rejection. As the critical yield figure becomes less relevant, advisers and providers want greater regulatory assurances on this complex area of the market.
Judging from the conversations I have had with advisers, the debate around DB transfers looks set to run and run.