Quilter: Will the long-awaited DB transfer template finally deliver?

At the peak of the market around two years ago, clients were frequently left frustrated as Cash Equivalent Transfer Values (CETVs) lapsed.

Many advisers conducting defined benefit transfer appraisal will be familiar with the potentially jeopardising effect of even a small snag in the process.

Where valuations lapsed clients were forced to ask the scheme to revisit the valuation at additional cost, or wait a full 12 months before they were entitled to submit another valuations request.

Clients were understandably frustrated by the process. And there was unwelcome publicity for the industry which was unfairly portrayed, in some cases, as blocking member access to their own money.

It means that not only was the situation frustrating for those advisers and clients concerned, but it also did little to endear the public to the pensions system.

Once a valuation is supplied to a scheme member, they have only 90 days to make their decision and conduct their transfer before it expires

Transfer delays

Many competing factors contributed to delays in the system, with a mounting queue of transfer business threatening to compound the impact of any setbacks in the process. Once key issue can be the to-and-fro between the scheme and the adviser after a valuation is supplied.

This is because conducting a detailed analysis is a complex process (previously called Transfer Value Analysis, now called Transfer Value Comparator and Appropriate Pension Transfer Analysis). It involves evaluating multiple features of the scheme, not only the headline transfer value. Discrepancy in the data supplied often requires the adviser to correspond with the scheme to obtain the necessary details, which can become a laborious process if the turnaround time form the scheme is slow.

That is why The Pensions Regulator kicked off a project intended to provide standardised template for schemes to use when providing a CETV.

In theory it ought to be a win-win, both for schemes struggling with the administrative burden of processing requests and advisers looking to expedite the process.

Helping to resolve data irregularities in the reports provided by different schemes would, in turn, cut down significantly on the interventions required in order to tidy up incomplete CETVs and progress to the stage of producing a full analysis report.

Anticipated template

Regrettably, the process of producing this template has itself suffered delays. TPR and The Pensions Administration Standards Association did have their work cut out. The nature of the fragmented DB landscape means there is a mosaic of different conditions and benefits attached to pension entitlements across the UK. Producing a standard template everyone could agree to was not straightforward.

As a result it has taken some time for a common standard to be agreed. It is now due to be published on 8 July. Regrettably, TPR recently warned it may not meet the needs of all advisers. It remains to be seen exactly what is produced, but if the template fails to eradicate a significant proportion of the irregularities in CETVs then there may be questions over whether the exercise was worthwhile at all.

Advisers specialising in such an important area want to be able to focus on client service and adding value by supporting the key decision-making process, rather than committing resource to obtaining data from scheme administrators. While it isn’t something clients are well placed to do themselves, the painstaking process of gathering the information from schemes is now one which best utilises the adviser’s expertise. And ultimately the additional cost and time associated with resolving data discrepancy is passed on to the client.

The market has cooled significantly over the last year and a change in conditions might see volumes rise again in the future. If it does, advisers and the retirement industry will be hoping the long-awaited template finally delivers.

Ian Browne is a Pensions Expert at Quilter

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